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LatinNews Daily - 03 November 2020

In brief: Mexico’s CFE found to be unprofitable and uncompetitive

* A new report by Mexico’s federal audit office (ASF) has concluded that the Comisión Federal de Electricidad (CFE), the state-owned electricity firm, is currently not profitable and unable to compete with other providers in the domestic electricity market. The government led by President Andrés Manuel López Obrador insists that it wants to “rescue” the CFE, and is seeking to introduce changes to the electricity market regulations to the benefit of the firm, so that it can offer cheap electricity to Mexican consumers. However, the ASF’s 2019 national accounts report cites the subsidies offered to household and agricultural consumers; uncompetitive tariffs for the industrial sector; ageing infrastructure; and bad management as having led the CFE to post M$40.38bn (US$1.88bn) in losses in 2019. The report states that the CFE is currently “not profitable and does not generate any economic value for the state”. It also notes that the CFE’s electricity generation costs remain higher than those of private firms, making it unable to compete in free market conditions, and preventing it from contributing to lowering domestic electricity prices.

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