MEXICO CITY (Reuters) – Mexican President Andres Manuel Lopez Obrador said on Monday contracts private companies have with state-run power utility CFE should be revised to keep electricity prices low, sending shares in one firm tumbling.
“We are urging companies that have agreements with the Federal Electricity Commission (CFE) to come together to review contracts and above all to reach an agreement that electricity prices will not increase,” Lopez Obrador said during his morning press conference.
The president, a leftist who took office in December, pledged during the campaign to strengthen the CFE and avoid energy price hikes during his term.
Lopez Obrador noted that the state-owned utility is already contractually obliged to pay billions of dollars to the private companies that developed seven natural gas pipelines to supply power plants, even though the projects are incomplete and unable to deliver gas.
Those companies are Mexican energy infrastructure firm IEnova, a unit of U.S.-based Sempra Energy; TransCanada Corp; and Mexican tycoon Carlos Slim’s Carso, said CFE chief Manuel Bartlett.
Over the past couple decades, Mexico has transitioned to natural gas to generate most of its power, relying increasingly on imports via pipeline from the United States.
At Lopez Obrador’s behest, Bartlett cited by name several former public servants who are now energy company executives, accusing them of taking part in a scheme to “destroy” the CFE.
“If the pipelines can’t be built, as is happening in seven large gas pipelines, the companies still have to be paid even if there’s no gas,” said Lopez Obrador.
IEnova’s shares dropped as much as 6.95 percent, TransCanada’s 0.67 percent and Carso’s 0.94 percent after the comments.
In a statement to the Mexican stock exchange, IEnova said it has one pipeline that began operations in 2017 but that “sabotage” interrupted supplies to CFE.
Some companies have been unable to complete construction of pipelines because of opposition from local communities. In other cases, the companies cannot deliver the gas even though the pipelines have been completed because of delays in building and converting power plants.
Lopez Obrador has been a staunch critic of 2013-14 energy reforms that ended the wholesale electricity monopoly held by CFE.
“We are looking to achieve a voluntary restructuring of agreements and commitments within the framework of the law … the government is committed to not increasing electricity prices for consumers, but we want private companies to help,” he said.
(Reporting by Anthony Esposito and Miguel Angel Gutierrez; Additional reporting by Marianna Parraga and Noe Torres; Editing by Jeffrey Benkoe and David Gregorio)