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    Deepwater : CFE, lawsuits for 12 mmdls and natural gas at 12 dlls


    June 15, 2022 - CE Noticias Financieras

     

      While everyone was watching the Federal Government do everything it could to pass its constitutional reform on electricity, sinking its own ships and those of others, we did not notice what was happening in the CFE, led by lawyer Manuel Bartlett, and the Energy Regulatory Commission, led by Vicente Melchi, who got involved in everything and against everyone in the electricity industry.

      The size of the fuss generated in this sector in a little more than two years are enormous lawsuits that will end up in international courts and that, according to specialists, may generate a damage to public finances of 12 billion dollars.

      And, as if that were not enough, the enormous errors in the operation of the State regulator further damage an industry that they intend to "rescue from the hands of foreign businessmen". The market calculates that record prices could be reached in the South Texas natural gas market, unimaginable prices such as 12 dollars per million BTU's and then yes, the perfect storm in the electric sector because today, as never before, we depend on fossil fuels and the CFE has not added anything new to its generation capacity.

      The CFE projects, with the blessing of the CRE, are 11 combined cycles that were not put out to bid, they were awarded directly, they are practically emergency plants that were given to two companies dedicated to selling equipment: Siemens and Mitsubishi, and another one was given to some businessmen who had never won anything, those from Wärtsilä.

      All these projects are at the risk and expense of the CFE that will be responsible for all their costs, regardless of the size they are and the rates will not be a problem, the CFE can increase them whenever it wants because on December 28, 2018, already with the 4T in the government, the decision was made to adjust them to inflation, regardless of the cost of fuel, that seemed like a good idea when it was between 2 and 5%, nothing but now the perspective is that it will be at least 8 to 8.5% and in energy it could be even more, up to 12%.

      The blackouts we have seen since 2019 are more and more constant, the pandemic with the lockout and the economic standstill slowed them down a little, however, with the return of economic activities they are becoming more and more common and the greatest risks are in industrial areas such as the Bajío, the northern basin of the Gulf of Mexico, Monterrey, an important part of the Edomex and Puebla-Tlaxcala. CFE maintains its monopoly in distribution, which is where the business is, and can charge whatever it wants because of the aforementioned decree, it could be less, but they cannot because they rejected and blocked the wind and solar projects. The electric rates have already assured an increase of at least 7.5%.

      In short. The bottom line is that this whole disaster has generated lawsuits on all sides and so far there are at least 21 lawsuits or arbitration proceedings against the CFE for operations carried out by its personnel at the time of purchasing, transporting or delivering natural gas.

      To think that the President's powers can go beyond the borders is a mistake and the CRE staff knows it, they were aware all the time of the operations that were being carried out and they endorsed them or, in fact, turned their eyes away.

      They explain to us that CFE Internacional is going to have to take the blame, but the problem is that this company depends directly on the Finance Department of the state-owned companies and its Board of Directors.

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