Increasingly competitive Mexican electricity rates will be a boon to both residential consumers and industry.
One of the major reforms that has begun its implementation in Mexico is that of the energy sector, which had been closed to foreign investors for seven decades. Although the much needed measures that have been approved by the country’s congress during the term of president Enrique Peña Nieto have focused mainly upon the oil industry, Mexico’s national electricity company, the Comisión Federal de Electricidad, (CFE), is in the process of initiating projects, as well, with the end goal of lowering Mexican electricity rates for the nation’s growing population of more than one hundred and twenty million individuals, as well as for its expanding industrial base.
The CFE announced this week that it will be spending approximately US $10 billion over the next several years on a total of twenty-four projects with the aim of achieving its stated goal of offering more competitive Mexican electricity rates to both its residential and commercial customers. Among the projects that have been put out for bid by the Comisión Federal de Electricidad are:
- the construction of five pipelines for the purpose of carrying natural gas to generating plants, which will be fueled by clean burning natural gas;
- the building of several branch pipelines that will enable a more efficient and geographically expansive distribution of the power generating resource;
- the development and construction of four new, natural gas powered, generation plants;
- the construction of both new on and offshore pipelines that will enable Mexico to increase the importation of cheap natural gas from US suppliers.
The largest pipeline project that has been put out for bid thus far by the CFE is a proposed, subsea “gasoducto” that will transport natural gas five hundred miles from South Texas to the Port of Tuxpan, in the Mexican State of Veracruz. This initiative is part of the Mexican government’s goal of bringing down Mexican energy rates using plentiful US natural gas by expanding the country’s pipeline capacity by seventy-five percent. The estimated price tag on the project is US $3 billion. The five hundred mile long underwater pipeline is expected to come on-line at the end of the second quarter of 2016, and, when functional, will move 2.6 billion cubic feet of natural gas from the US to Mexico every 24 hours. CFE officials have stated that most of the transported natural resource will be used to fuel generation plants that are located in Mexican Gulf Coast states.
In addition to eventually decreasing Mexican electricity rates for both citizens and industry, the South Texas-Tuxpan pipeline, as well as the twenty-three other projects being funded and executed by the CFE, and its contractors and subs, will produce other ancillary benefits for the country and its businesses. Among these will be:
- the materialization of opportunities for both Mexican and US groups and institution to participate in the financing of Mexican natural gas initiatives;
- the expansion of sales possibilities for suppliers of materials, equipment and services, for both Mexican and US-based firms;
- the creation of construction jobs needed to build pipeline and other generation and related infrastructure;
- the generation of ongoing jobs for personnel that will be required to maintain what has been built.