El Financiero
November 1, 2001
By Ivette Saldada

Eleven months after coming to power, the Fox administration yesterday unveiled its six year plan for Mexico's energy sector. The energy secretary outlined how the electric power industry will be reformed. He also announced fiscal reforms for Petroleos Mexicanos (Pemex) and La Comisíon Federal de Electricidad (CFE). The administration has not presented its plan to Congress. The legislative body is waiting its turn.

The 2001-2006 Energy Sector Program includes one element that the administration sees as crucial -- constitutional reform. Proposed reforms would allow private sector participation in the exploration and production of natural gas. The reforms would also allow changes to secondary laws regarding petroleum refining and natural gas processing.

Secretary of Energy Ernesto Martens Rebolledo and Sub-Secretary of Energy Policy and Technological Development Francisco Barñes de Castro affirmed during the presentation of the program that it would generate sufficient energy to meet Mexico's needs. They also stated that the program would ensure quality of service, the creation of internationally competitive businesses, maximum investment, decreased reliance on imports and greater exports.

Investment in Mexico's petroleum industry is insufficient and extremely limited. Current electricity projects only guarantee power until the year 2005. The energy secretary says that in order to achieve the proposed objectives of the Energy Sector Plan, structural reform will be necessary. This reform must, he says, anticipate modernization of the management of the sector's businesses. This would mean that decision making responsibility would be returned to the Administrative Council of each agency. Fiscal reform for Pemex and CFE, to free them from excessive financial burdens, is another objective.

On the other hand, legal reform is necessary to provide confidence and stimulus for private investment. This would create more opportunities for investors in areas such as gas exploration and production, oil refining, gas processing, renewable energy and the development and generation of electricity.

Electricity

In the case of electricity, it is hoped that generation and distribution divisions of CFE and LFC (Luz y Fuerza del Centro) will become business units. Also, new private energy suppliers will be attracted and new commercialization schemes will be sought.

The program also mentions the expansion and strengthening of cooperation with international energy suppliers andÊgreater participation in the selling and buying of energy on the world market.

Martens Rebolledo explained that the program proposes solutions in the present while respecting principles of sovereignty and social commitment. He also explained that the program clearly establishes that the assets of Pemex, CFE and LFC will not be privatized and that workers' rights at each agency will be respected.

Translated from Spanish by Shannon Stice on November 12, 2001