Mexico is threatened by energy shortage

Jul 08, 2004 02:00 AM

Energy Secretary Fernando Elizondo said Mexico runs the risk of energy shortages if it does not make "the necessary investments" and that the country's dependency on fuel imports is "dangerous."
"We're running the risk of suffering energy shortages, but not immediately. If we don't make the necessary investments, however, we will" face an energy shortfall, the official warned Congress.

Elizondo was summoned to explain the recent rise in gas prices at the pump. But lawmakers also questioned the minister about state-owned oil company Pemex's investment scheme, and the nation's excessive dependence on gasoline imported from the United States.
Mexico is one of the world's largest oil producers, but a constitutional ban on private capital investment in the sector forces Mexico to import 25 % of all its gasoline and diesel fuel from the United States.

Elizondo stressed that under President Vicente Fox "we have launched very important investment programs" which are expected to "increase production by 70 %."
"The government's policy is to increase the availability of gas in the market to address the increase (in prices) and vulnerability, by trying to invest as much as possible in exploration," he told legislators. He insisted that the way crude-exporting nations can obtain cheap fuels is not by offering subsidies, but instead "to depend less on foreign markets that attack us with their volatile prices."

The strict regulations governing Pemex establishes that the state oil firm must pay 60 % of its sales in taxes every year, which represents some 35 % of government revenues.
""We have an investment program that allows us to increase our processing and refining capacities. It will be difficult for us to attain total self-sufficiency, but we are going to reduce the dependency we have on foreign" fuels," Elizondo said.
President Vicente Fox has struggled without success to get Congress to approve reforms that would preserve Pemex as a state-owned firm while allowing private investment in the energy sector.

Source: EFE
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