Tuxpan – Tula: CFE and TC Energy Strike a Deal

The Federal Electricity Commission (CFE) and TC Energy have struck a deal to unblock  social issues that have impeded the completion of the Tuxpan – Tula natural gas pipeline in Puebla.

The pact seeks to bundle all of TC Energy contracts in the center of the country into one, which will confer CFE savings on payment commitments it would otherwise have to meet. Thereby making a rare moment of agreement between the state and private energy companies.

In exchange, the state company will also obtain additional services in the new joint system which will help to continue guaranteeing citizens the security and energy sovereignty of Mexico. 

“In order to solve the problems inherited by the previous administration, which have cost hundreds of millions of dollars to Mexico and have caused problems for the indigenous residents  of the Sierra de Puebla, the CFE has agreed with the company TC Energy to take a  more active role that allows solving social conflicts and completing the Tuxpan - Tula gas pipeline, essential for transporting natural gas from the Gulf of Mexico to the center of the country," CFE said in a press release on Sunday.

The pipeline aims to address natural gas shortages in Mexico’s southeast by bringing in supply from Texas to Veracruz, which in turn will be interconnected to the Engie Mayakán pipeline that runs through the states of Tabasco and Campeche.

“The security in the supply of this gas pipeline will give reliability to the electrical system and will be an engine of development for the Yucatan peninsula and the southeast of Mexico", stated CFE.

This follows after CFE negotiated individually with TC Energy at the beginning of 2019 after concluding that it was losing millions of dollars in services which was protected in contracts Manuel Bartlett descried as “leonine”.

Although the state company justified their litigation on the grounds that it would save more than US$4 million, the Superior Audit of the Federation (ASF) found these negotiation efforts had actually represented more than US$6.8 million in long-running damages.