Mexico City, Mexico — (METERING.COM) — October 12, 2009 – Mexico’s largest state power company Comision Federal de Electricidad (CFE) is to take over Luz y Fuerza del Centro (LyFC), which provides power to Mexico City and the surrounding area.
In a press conference interior minister Fernando Gómez Mont said that LyFC’s financial situation had become untenable, requiring a subsidy in the current year equivalent to the country’s main poverty program, “Programa Oportunidades,” which benefitted more than 25 million Mexicans.
Explaining that continuing on this path would have required the transfer by 2012 of more than 300 billion pesos (US$22.6 billion), Gómez Mont added: “In these difficult economic times, derived from the international crisis, both the government and citizens must make an extraordinary effort. Keeping these transfers would have meant raising rates disproportionately and asking for more taxes from taxpayers.”
Gómez Mont noted that productivity at LyFC was weak, with an equivalent of 730 MW/h sold per worker, compared with 2,500 MW/h at CFE. Moreover losses at LyFC were around 33 percent, compared with 10 percent at CFE.
“This decision will substantially improve customer service and provide a more efficient power supply through better infrastructure, as in the rest of the country,” said Gómez Mont, adding that this does not imply a privatization of the service, which will remain in the hands of the state.
“The federal government must make more efficient use of resources that belong to all Mexicans and channel them to the people’s priorities, including fighting poverty and investing in health and education as well as the provision of public safety.”
Under the federal law for parastatal utilities LyFC will be liquidated and its assets incorporated into CFE.