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    Expensive natural gas lurks at CFE

    August 4, 2022 - CE Noticias Financieras


      Mexico City - The increase in fuel prices, particularly natural gas, impacts the Federal Electricity Commission (CFE), which generates between 60 and 70% of its electricity with this molecule.

      The state-owned electricity company acknowledged in its latest financial report that purchases of gigajoules of natural gas (equivalent to almost one million BTU) have become more expensive, going from 2.5 dollars to 7 and 10 dollars.

      This has impacted its finances and led it to record a net loss of 8,707 million pesos in the second quarter of the year.

      Oscar Ocampo, coordinator of the energy practice of the Mexican Institute for Competitiveness (Imco), explained that the volatility of fuel prices, especially natural gas, significantly affects the CFE, which produces close to 70% of its energy with this molecule.

      He explained that there are two impacts. One is the part of electricity generation due to the use of natural gas.

      "And the second one, which might seem minor but is not really, is the part of the purchase and sale of fuels that CFEnergía and CFE Internacionalhave," he pointed out.

      He explained that this is very important because what they do is thepurchase and sale of fuels, so an increase in the price of the molecule, although it does not generate losses, will leave smaller margins at the time of selling.

      In view of this, Ocampo reminded that it is essential for the Commission to have hedges to protect it from price volatility, although this does not fully protect it, and that it should be allowed to buy renewable energy such as solar and wind power.


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