Mexico fuel, electricity price hikes provoke call for energy reform review
The president of Mexico's lower house has called for a review of the legal framework governing the country's energy reform, given recently announced rises in gasoline and diesel prices and an increase in electricity tariffs for the commercial and industrial sectors.
Opposition PRD party congressman Jesús Zambrano Grijalva said the announcement by the government of the fuel and electricity price increases from September 1 mean promises made regarding the benefits of the energy reform for the "economy of the population" are false, according to a congress press release.
He said the energy reform has not met the expectations generated by the federal government but that it has led to the privatization of resources, and therefore changes must be made to revert it.
Mexico's finance ministry (SHCP) announced this month that gasoline prices will rise from September 1, while state utility CFE announced that electricity tariffs for the industrial sector will increase by between 6.5% and 8.4% from the beginning of September, compared with the same month in 2015, while tariffs for the commercial sector will increase by between 8.6% and 9.4%. High-consumption residential customers, known as DAC, will see a 9.3% year-on-year increase.
However, low-consumption domestic customers, which account for almost 90% of total users, will see their electricity tariff unchanged. So far this year, this segment has seen its tariffs drop 2% compared with December 2015.
The electricity price hikes contradict the government and the energy ministry's (Sener) claims that the energy reform will reduce prices as the CFE converts from the use of fuel oil to natural gas for power generation and the country expands its pipeline network to increase imports of the fuel and its supply to more regions of the country.
Furthermore, in October of last year, the government had ruled out gasoline prices hikes for this year. Gasoline prices are to be floated by 2018 as the sector is opened up to competition among private firms and state oil firm Pemex for the first time.
Mexico aims to augment its pipeline network 85% by 2019 to almost double the total pipeline length the country had in 2002, a goal that is already 78% complete.
The price of the natural gas used by the CFE increased 10.9% in August compared with July, while the price of fuel oil increased 14.9%.
Natural gas remains 45% cheaper than fuel oil, and more environmentally friendly, the CFE has said.
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