CFE Reports Loss of US$430 Million in 2Q22

According to the financial statement of CFE sent to the Mexican Stock Exchange, it lost US$430 million. The losses are mainly due to soaring prices for the natural gas that CFE uses in its plants to generate electricity. Nevertheless, its US$2.31 million total losses over 1H22 are much lower than the US$689.23 million it lost in 1H21.

An increase in CFE’s income of during 2Q22 did not prevent the company from closing the quarter with losses, whereas it had reported a positive balance of US$11.2 billion in the same period for 2021.

The state utility reported that the losses are mainly due to rising cost of fuels that CFE consumes, most of which are imported from the US, such as natural gas. Over 60 percent of Mexico’s power relies on this fossil fuel.

"Currently, natural gas is bought at prices oscillating between US$7/GJ, while at the start of 2021 it was bought for US$2.5/GJ," said CFE, adding that it expects the situation to continue amid a global gas shortage.

From the President López Obrador’s perspective, CFE was extremely weakened by the 2014 Energy Reform promoted by his predecessor, Enrique Peña Nieto. This reform sought to end the state-owned company's monopoly to encourage competition in the energy sector, something López Obrador criticized strongly.

López Obrador’s discourse in defense of CFE has been focused on the principles of national sovereignty and energy security, since in his opinion, Mexico should not depend on private power production because national interests would not be guaranteed. Nevertheless, CFE remains subject to fossil fuel imports and their price hikes.

The revenue obtained by the company between April and June amounted to $US7.81 billion, an increase of 22 percent compared to the US$6.52 billion obtained in 2021 for the same period.

However, its sales costs reached US$7.15 billion, which represented an increase of 29 percent compared to the same quarter of 2021, when they amounted to US$5.52 billion.

 “The main increases in costs are observed in depreciation and other expenses, the first derived from the revaluation made regarding property, plant and equipment and in other expenses to deal with liabilities,” CFE reported.