Moody’s rules out increased private investment in Mexico’s electricity sector

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Mexico City, Jun 22 (EFE) .- The agency Moody’s ruled out on Tuesday an increase in private investment in the electricity sector in Mexico in the next three years after the recent measures adopted by the Mexican government to change the regulatory framework of the energy sector that “could have a negative impact on some existing contracts.”

Last March, the Government of President Andrés Manuel López Obrador promulgated a controversial reform to the Electricity Industry Law, suspended in the Judiciary, which prioritizes the plants of the state Federal Electricity Commission (CFE), including polluting ones, on the private ones of renewable energies, a decision that was not seen by the investors.

“We do not expect an increase in private investment in the power sector during the next three years,” the agency said in a report distributed to the media.

He added that given the lack of investment “it is possible that the CFE will have to increase its debt to complete the proposed projects.”

Moody’s stated that “if half of the investment expected to be financed by the private sector (15% of the total investment) is financed with debt, we project an increase in the ratio of debt to book capitalization to approximately 66.7% for 2024, from 61.7% registered in 2020 “.

The agency recalled that the CFE has an ambitious investment plan of about 381,500 million pesos (about 18,700 million dollars) until 2026, of which 53% will go to power generation projects, 20% to transmission, the 20% to distribution, and the rest to telecommunications and others.

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But he pointed out that this CFE business plan “carries financial and execution risks.”

Last Thursday, the CFE promised to raise its investment in the administration of Andrés Manuel López Obrador to up to $ 4.85 billion to create 8,080 megawatts (MW) of installed capacity.

The investment was announced despite the losses of almost 79,000 million pesos (about 3,950 million dollars) that the CFE recorded in 2020 and the negative figures of 35,606 million pesos (about 1,780 million dollars) in the first quarter of 2021.

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