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"We have to think in the long term. In the next 20 years, nuclear power is an energy source we, and many other countries, will need," CFE head Alfredo Elias Ayub said, adding that the new plant would be completed before 2020, and is expected to cost between 3 and 4 billion dollars.
Because of the high construction costs, Mexico is unlikely to build more than one such plant, he added.
The plant to be upgraded was completed in 1990 by GE Energy and is based in Laguna Verde in the eastern Mexican state of Veracruz. It generates 5 percent of Mexico's electricity, but had to be shut down when a cable burned out.
"If operators follow the procedures, then nuclear plants are completely safe," Ayub said in response to a question about the Veracruz plant's safety.
Human error caused high-profile atomic accidents in the past such as that in Chernobyl in the former Soviet Union in 1986 when a reactor exploded and leaked massive radioactive material.
According to the CFE, Mexico's electricity demand would grow by 4 percent this year.
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