Mexico’s state-owned utility, the Federal Electricity Commission (CFE), reported a loss of about US$500 million for 2017, mostly because of the costs of importing natural gas and LNG from the U.S.
CFE said it lost almost 10 billion pesos last year, against a profit of about 85.5 billion pesos in 2016. It lost 93.9 billion pesos in 2015.
CFE said its revenues rose by 34 per cent over 2016, but the cost of importing about half of the country’s daily gas needs of about 8 bcf/d led to the loss.
CFE said its operating costs rose by 36 per cent mainly due to the cost of importing fuels to generate electricity, which depend on international markets.
Analyst Luis Miguel Labardini, of Marcos y Asociados, said the cost of importing natural gas should decline as more pipelines are built and put into service. Last year CFE imported higher volumes of higher cost LNG than it had budgeted.
The company is converting most of its generating assets to burn natural gas, instead of the fuel oil they have relied on for decades. However, with the country only able to meet about half of its needs domestically, it has had to import growing volumes of gas.
The state-owned utility is reducing its headcount and last year reduced its staff by about 3,000. It now has fewer than 10,000 employees.
Last spring CFE presented a five-year business plan that proposed investments of 256 billion pesos (about US$13.7 billion) and includes partnerships with private sector firms.
The company plans to invest 168 billion pesos in new generation capacity, as well as modernizing existing power stations.
It plans to spend 40 billion pesos on transmission lines, while 48 billion would be spent on distribution, including the development of a “smart grid”.
It said it will aim at reducing operating costs by 21 per cent, saving 21 billion pesos.
CFE also plans to consolidate its 13 subsidiaries and affiliates.