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News Article

CFE’s Federal Expenditure Budget Reduced by 8.6 Percent

By Cas Biekmann | Mon, 12/21/2020 - 12:59

Mexico’s Federal Expenditure Budget Bill proposed an allocation of MX$417.14 billion (US$20.67 billion) toward CFE’s budget over the fiscal year 2021. This is a reduction of 8.6 percent in comparison to what was approved for 2020, reported La Jornada. The budget is destined to cover CFE’s costs for fuels toward power production, efforts to modernize and operational expenses in the wholesale electricity market (WEM), where the state utility aims to expand further.

CFE is expected to use part of its budget toward modernizing its power plants, focusing especially toward its hydroelectric assets, to which MX$1.689 billion (US$83.7 million) is set aside. CFE’s hydropower plants will contribute 30TWh of power generation, and despite their age remain a staple of Mexico’s energy production. In general, CGE aims to rehabilitate and optimize its power plants, create new electrical infrastructure and purchase maintenance equipment. CFE’s main priorities for 2021 are investments toward the Yucatan and Baja California peninsulas, these areas struggle to ensure the necessary energy supply due to their isolation.

Regarding renewable energy, the bill briefly refers to CFE’s promotion of renewable electricity generations, which will help contain costs pertaining to 45 million users on the CFE basic supply scheme. Breaking with previous trends, BNAmericas reported that CFE is examining the potential to build 500MW of renewable capacity, without specifying which renewable resource it is interested in. The move could be the current administration’s first foray into renewables, with recent plans focusing firmly on thermal energy generation based on natural gas. However, the bill still refers to more polluting resources as well: “The intention is to take advantage of the use of fuel oil in the existing infrastructure, contributing to the increase of our own installed capacity. This will reduce the purchase of energy from third parties and the costs of production, with the purpose of increasing CFE’s income and guaranteeing low rates,” it reads.

Furthermore, the bill notes that CFE’s budget proposal also considers a MX$70 billion (US$3.47 billion) governmental support in order to subsidize electricity rates for end users in the domestic sphere and agricultural sectors.

CFE’s allocated budget does not include resources to pay back the ‘pidiregas’, financing schemes in which private companies provide capital for project development, which the government later pays back with some interest. Here, CFE is considering to invest MX$54.8 billion (US$2.71 billion), partly relying on pidiregas’ direct investment modality, but mostly relying on the conditional investment modality. CFE has also contemplated the construction of four projects stemming from pidiregas modalities from precious years, including the power producing projects and one transmission project, expanding the company’s portfolio by 1,425MW.

The data used in this article was sourced from:  
La Jornada, BNAmericas
Cas Biekmann Cas Biekmann Journalist and Industry Analyst