Mexican Official: Energy Deregulation Will Be Gradual

MEXICO CITY -- - Mexico's economy minister said Friday that the proposed opening of the country's energy sector to private investment would take place in stages, pointing to the electricity reform measure now before Congress as the most urgently needed step.

"This is how the president (Vicente Fox) believes it should be done, in stages; electricity is the first stage," Minister Fernando Canales told a press conference.

Canales said that even though the Mexican economy had grown only modestly in recent years, electricity use had increased by 6 percent annually nationwide and at an even faster pace in some states.

For instance, consumption has been growing by nearly 12 percent annually in the northern state of Nuevo Leon, home to Mexico's industrial capital, Monterrey.

Meeting the surging demand for power will require resources the government doesn't have, the minister said, underlining the urgency of winning congressional approval of legal reforms allowing private investment in the industry.

Canales pointed out that the government sent the electricity reform bill to Congress last year, and was still awaiting action by lawmakers.

The minister noted that the issue of the need for private capital in the electricity sector was raised during the 1994-2000 administration of President Ernesto Zedillo, Fox's predecessor.

He also stressed that allowing private participation in the energy sector would not affect the status of state-owned oil giant Pemex, vowing the firm would not be sold.

Canales added, however, that "there are some areas of the oil industry which should be open to the national and international private sector."

In August last year, the government sent to Congress a reform bill modifying the constitution to allow for limited participation of private capital in the generation of electricity.

Originally, the government considered a complete deregulation of the sector, but the bill stipulates that private energy producers can only sell their electricity to companies and not to residential customers.