Enron to evaluate Mexican investment opportunities to grow operations

Jul 18, 2000 02:00 AM

US Enron is "very bullish" on opportunities in Mexico's energy sector, the company's Mexico operations CEO Max Yzaguirre said. Enron is evaluating investment opportunities as and when they come up in the sector, and would like to grow the size of its operations in Mexico, he said. "Now that we have a permanent presence, we'd like to grow a bit," Yzaguirre said.
Enron received its first permit from Mexican authorities June 19 to operate a cogeneration power plant in Mexico. The company will construct a 245-MW plant in the northern city of Monterrey to supply electricity and steam to Mexican industrial conglomerate IMSA, glass maker Vitro and cement maker Apasco. The plant is due to come on line at the beginning of 2002.
As the North American region energy market becomes more integrated, a strong presence in Mexico will be strategic, Yzaguirre said. "To be a major player in the region," he said. "You need to be a major player in each area."

Enron is looking at both power- and gas-related investment opportunities, Yzaguirre said. "We're not limiting ourselves in terms of opportunities on the energy side," he said. "If it has to do with electricity and natural gas, we'll take a look at it." Enron has no budget limitations on what it can take on, Yzaguirre noted.
Enron's interest in Mexico has been stimulated by growth projections for Mexico's power generation sector and the economy in general, Yzaguirre indicated. He noted Energy Secretariat figures on the need for extra power generation capacity. The Secretariat recognises a need to have 57,000 MW on line by the end of 2008, vs. present capacity of 35,662 MW.
Mexico's power sector monopoly, the Federal Electricity Commission (CFE), is in the midst of an aggressive program to auction power plant contracts to private companies. Under Mexico's limited opening of the power sector to private investment, companies can build plants to supply the CFE. Power plant operators also can build facilities to supply private companies. Enron's Monterrey plant falls under the latter scheme, known as self-supply.
There are many opportunities for power generators under the self-supply plan. Numerous companies have received permits for self-supply, although few have yet contracted power plant developers to begin construction. On the natural gas side, Mexico needs pipeline construction and storage facilities after completing recently a program to auction off distribution contracts in 15 of its most populous urban areas.

Enron makes no bones about its support of more extensive deregulation and opening to private sector investment in the Mexican energy sector. "Some of Mexico's energy needs are crystal clear," Yzaguirre said, pointing to the extra capacity needed in the power sector. "Energy is not a luxury. It's a necessity if Mexico is to continue attracting investment to continue economic growth."
President-elect Vicente Fox's economic advisors have said reforming the power sector to prevent a bottleneck in supply would be one of Fox's priorities. Advisors have indicated he may push for reform in Congress even before he takes office on Dec. 1. Congress is due to begin its next session in September.
President Zedillo sent a power sector reform initiative to Congress in February 1999. That initiative got bogged down in pre-election politicking, ahead of the July 2 vote.

Source: Bridge News via Newspage
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