“It corresponds exclusively to the Nation to generate, conduct, transform, distribute and supply electrical energy for use in service to the public. In this respect, no concessions are granted to individuals and the Nation will take control of the materials and natural resources that are necessary to this end.” (Article 27 of the Political Constitution of Mexico).

Nonetheless, the process of privatization is already in progress…

THE COMING TRANSNATIONAL INVESTMENTS:

In the Mexican electrical sector, no active assets have been sold (installations, property or real estate); nonetheless there are other kinds of privatization (see the bulletin “Chiapas al Día” No. 280). The Federal Electric Commission (CFE) has published a list of projects so that foreign transnational companies will invest in the country’s electrical sector to generate, conduct, transform, distribute and supply electrical energy to the CFE or to the companies themselves. These companies are kindly referred to as “PEE” or External Producers of Energy (or some are given the additional permission to be Independent Energy Producers “PIE” or Financed Public Work “OPF”.

In this way, the transnational companies are offered an “indirect credit” as explained by an officer of the CFE: “The company Electricité de France or Mitsubishi makes the plant. CFE commits to buying their entire generation capacity during 20 years; with this contract they obtain credit, which in the end is an obligation on the part of CFE to pay – so it is an indirect credit which is as if it were a credit of the CFE.” Now several questions arise: Why then doesn’t the CFE do it? How is it possible that the sale of electrical energy, development driver of the neoliberal market, is not business enough and the CFE has to invite companies to invest – and that furthermore they invest not with their own resources, but through credits, governmental and multilateral bank support).

For February 2002, 30 projects were listed, of which only two are hydroelectric (one new construction between Nayarit and Jalisco and an expansion of the Chiapas dam of Chicoasén).

These bids (auctions) for companies to present their proposals will be published in the Official Diary of the Federation between 2001 and 2002. The financial capacity that transnational companies should have to compete in the bids ranges from 45 million, 100 million, 130 million, 225 million or 1 billion pesos, according to the size of the work that the Federal Electricity Commission is soliciting from them. All these works should be finished between 2002 and 2007, according to the situation. For its size, only the new hydroelectric dam known as El Cajón in Nayarit and Jalisco will be permitted a later termination in 2009. In this lapse of time, various political and economic factors coincide: such as the presidential period of Vicente Fox in México and the period of advancement on the Plan Puebla Panama (PPP) that would not be able to attract private transnational investments without energy. On the other hand, the PPP is an expression or fundamental regional strategy to be able to sign the Free Trade Area of the Americas (FTAA) in 2005, achieving the opening of borders and elimination of all tariff barriers on imports and exports, as well as elimination of limiting laws, norms, decrees, etc. that would make things more difficult for large transnational companies to displace capital from the national oligarchy. It is also the period in which President Fox expects to finish free trade negotiations with Asia to be able to convert México in the waste basket and useless fool of neoliberalism, inside a three sided triangle that unites the three commercial blocks of the world: North America, Europe and Asia.

All said it is the stage for fine tuning and acceleration of the neoliberal model and of the concentration of riches, but at the same time the consequential rise in poverty and world social protests of inconformity. The loss of world consensus behind a model that has not brought benefits, but more exclusion and misery is what is making the richer powers accelerate this process of concentration and – by force or by coercion, raising military expenditures.

Electrical energy is of prime strategic importance for the development of concentrations of capital for those that drive neoliberalism; or contradictorily to sustainable development and improvement of the living conditions and human and cultural rights, in the measure that they are not considered “sellable” for the market. Thus the Mexican government goes hand in hand with those that have capital, so that the works that the Federal Electrical Commission is soliciting are already reserved for companies from the US and Canada, in cases where they were already set up within the terms of NAFTA. The other projects are not protected by the Constitution (as this is already being violated) but by the Law of Public Works and Services Related with the Same (General Law of Public Debt and Budget, Accounting and Public Spending Law, and the camouflaged debt-generator called Projects of Deferred Investment in the Spending Register (PIDIREGAS); as well as the Law of Electrical Energy for Public Service and its rulings, along with other free trade agreements that Mexico has signed. The minimum content of regional integration depends on them.

This signifies that, the works set up in NAFTA should be 35% Mexican investment, for which the transnational companies of Canada and the US should establish alliances with Mexican businesses that would account for this percentage. Nonetheless, little by little this percentage has been reduced to leave the field open to foreign companies since those works not set up within NAFTA have a national integration of only 25%. At any rate, to avoid the requisite national integration, transnational companies form their own registered Mexican company and disappear, in some cases, as soon as the work is complete.

The transnational companies do not lose or risk anything. It is the Inter American Development Bank (IADB) or the World Bank (WB) that donate, lend or guarantee their money in the event of natural or political disasters; it is the governments that back up the transnationals with more debt that they acquire to guarantee their investments; or the contracts made to buy energy from them for 25 years, although it is not consumed at the same rate if those companies decide to go to other markets, closing their maquiladoras and looking for increased comparative advantages in other Asian countries, for example. Under any of these operating systems, the resources come from the same source: from the taxes of the poor getting poorer.

The types of infrastructure construction that the Federal Electric Commission is soliciting from transnational companies are of various types: Transmission Lines (LT), Electrical Systems (SE), Hydroelectric Centers (CH), Turbo-Gas Centers (CTG), Internal Combustion – Diesel – Centers (CCI), Combined Cycle Centers (CCC), Thermoelectric Centers (CT), Dual Centers (CK) and Geothermal Electric Centers (CG). The specifications for the works vary, but in general they are for what is called “buying and selling of associated energy” where the Federal Electric Commission agrees to buy the energy that is produced during a 25 year period. The companies in general have to construct the substation, the transmission station, manage the buying and selling of fuel and the water supply, design, test, equip, construct, put into service, own, operate and maintain the infrastructure for which they have won the bid. In the case of the Transmission Lines, they construct the lines, substations and feed stations. In other cases, it is requested of the foreign companies that they handle the engineering, integral construction and necessary equipment, of testing and putting the project into service, of cargo, insurance, tariffs, guarantees, training, systems, etc.

The electrical infrastructure projects that are planned take in 90% of the national territory, with the exception of the states of Tabasco, Colima and DF. Projects are planned for Aguascalientes, Baja California, Baja California Sur, Guerrero, Guanajuato, Durango, Hidalgo, Chihuahua, Chiapas, Coahuila, Jalisco, Nayarit, Nuevo León, Estado de México, Campeche, Michoacán, Morelos, Querétaro, Puebla, Oaxaca, Sonora, Sinaloa, San Luis Potosí, Tamaulipas, Tlaxcala, Veracruz, Zacatecas, Yucatán y Quintana Roo. The objective is to construct an electrical connection that will guarantee energy to the industrial and maquiladora development poles, from North to South and from East to West. But above all, the plan is to connect the Mexican network within itself as well as to Central America so that the entire region is linked with and can supply the energy demands of the US, under norms that will guarantee it full access to the electricity without local government intervention. In this way “regulation” that the governments in the regions of the PPP have over the sovereign management of their own electrical energy is vilified, and they are accused of being a “state monopoly”, obliging them to “deregulate”. Nonetheless, another monopoly and regulation is being generated: the one that protects the large transnational corporations and North American interests.

Following we will see the projects that are being sold to foreign companies (to see them in detail, please see www.ciepac.org “Documents and Analysis” and “Maps”).

1)      CCC Tuxpan V: CT in Veracruz. 2) CCC La laguna II: CT in Durango. 3) CCC Altamira V: CT in Tamaulipas. 4) CCC Mexicali II: CT in Baja California. The company that wins this bid has the option to include an integrated solar-combined cycle system for which it would have a donation from the World Bank via Global Environment Facility, in the quantity of 49.35 million USD to construct the solar camp. 5) CCC Agua Prieta II: CT in Sonora. 6) CCC Tamazunchale: CT in San Luis Potosí. 7) CCC Valladolid: CT in Yucatán.  8) SE 504 Norte-Occidental: OPF in Nayarit, Jalisco, San Luis Potosí, Hidalgo, Estado de México, Guerrero, Baja California, Chihuahua, Coahuila, Nuevo León and Tamaulipas. 9) SE 405 Compensación Alta Tensión: OPF in the states of Campeche, Chihuahua, Coahuila, Guanajuato, Jalisco, México, Michoacán, Oaxaca, Sinaloa, Tamaulipas, Chiapas y Durango. 10) LT 407 Transmisión San Luis Potosí-Aguascalientes (2nd Phase): OPF in San Luis Potosí and Aguascalientes. 11) LT 502 Oriental-Norte: OPF in Baja California, Coahuila, Guerrero, Hidalgo, Jalisco, Estado de México, Puebla, Tlaxcala and Veracruz. 12) LT Manuel Moreno Torres Red Asociada (2nd Stage). Presa Hidroeléctrica de Chicoasén: OPF in Chiapas, Veracruz, Oaxaca, Puebla, Tlaxcala. 13) CG Los Azufres II and CG Fase B: Los Azufres II currently is Ander construction in Michoacán. OPF where each well will be paid in dollars. 14) LT 506 Saltillo-Cañada: OPF in Tamaulipas, Nuevo León, Coahuila, Zacatecas and Aguascalientes. 15) LT 615: OPF in Yucatán and Quintana Roo. 16) SE 611 Subtransmisión BC-NE: OPF in Baja California, Baja California Sur, Sinaloa and Sonora. 17) CCI Baja California Sur I: OPF in Baja California Sur. 18) LT 609 Transmisión NO-Occ.: OPF in Nayarit, Sinaloa and Sonora. 19) LT 612 Subtransmisión Nte-NE: OPF in Nuevo León, Tamaulipas, Chihuahua, Durango and Coahuila. 20) CCC Hermosillo: OPF of a CTG in Sonora. The gas turbine of the Immediate Action Plan of Hermosillo is in commercial operation since December 1998 and it is expected to be converted in a CCC, making an additional vapor cycle (steam turbine) necessary. 21) LT 607 Sistema Bajío Oriental: OPF in Aguascalientes, Chiapas, Guanajuato, Jalisco, Estado de México, Puebla and Querétaro. 2) CCI Guerrero Negro II: OPF in Baja California. 23) LT 408 Naco-Nogales (2a. Fase): OPF in Sonora. 24) LT Red Asociada de la Central Río Bravo II: OPF in Tamaulipas and Nuevo León. 25) LT 610-A Transmisión NE-Nte: OPF in Chihuahua and Sonora. 26) LT 610-B Transmisión Noroeste-Norte: OPF in Sinaloa, Sonora and Durango. 27) LT 614 Subtransmisión Oriental: OPF in Guerrero, Morelos, Puebla, Veracruz and Oaxaca. 28) LT 613 Subtransmisión Occidental: OPF in Guanajuato y Jalisco. 29) CH El Cajón: OPF in Nayarit and Jalisco. 30) CK Petacalco II (Expansion):  OPF in Guerrero.

The construction of the hydroelectric dam of El Cajón is planned after almost 10 years of having suspended such constructions in Mexico. The new dam on the Santiago River in the state of Nayarit will flood lands from the municipalities of Santa María del Oro, Jala, Hostotipaquillo, Ixtlán del Río and La Yesca in the states of Nayarit and Jalisco. Having initiated their studies in 1992, it is expected that the dam will be completed between 2002 and 2006 within the scheme of Financed Public Works. The hydroelectricity generated with have a capacity of 680 MW in two units, which represents approximately 2% of the current capacity installed in the country. Thus it will occupy the sixth position of hydroelectric dams in Mexico for its capacity of generating electrical energy, and it will be 186 meters high, for which it will become the second tallest dam in the country. It is expected that 650 million dollars will be invested. For the top official of the Federal Electric Commission, Alfredo Elías, El Cajon “does not represent particular social problems, as are many times present in the construction of hydraulic projects, nor does it present an environmental problem of any note, for which these two points, that become complicated in many cases of the construction of hydroelectric projects, are easily attended to in the case of El Cajón.” (from a speech made December 4, 2001 to the XXI Congress of the Mexico School of Engineering). Nonetheless, we doubt that it would be possible to minimalize the social, political, economic, cultural and environmental impacts of this project. On the significance and impact of hydroelectric dams on the land and on the environment, we will be more specific in a future Bulletin of “Chiapas al Día”.

This is what is now for sale and some are already conceding to foreign companies year to date. Nonetheless, there are other studies, intents, dreams and expectations to construct other hydroelectric dams in Chiapas as in the municipalities of Huitiupán (Itzantún dam), in Chicomuselo, in Las Margaritas or Ocosingo (5 on the Usumacinta river that divides Mexico from Guatemala). But also in the central zones of Parota and Copainalá.  There have been other studies and intents made in the northern zone of Chiapas, as well as in the states of Oaxaca and Guerrero where they have been suspended thanks to the resistance and organization of the indigenous and campesino communities. Although we will go into more depth on these projects in Chiapas in another Bulletin within the framework of the PPP, suffice it to say here that the hydroelectric potential of Chiapas, projected by the Federal Electric Commission and by the business sector, would portray the possibility of up to 75 hydroelectric dams in the state, of which 40 are in zones traditionally denominated as zones of conflict (la Selva), where the majority of the population is indigenous and where the principal Zapatista lands are located. But there are others in the Mexican Southeast: 4 in Oaxaca, one in the South of Veracruz, 3 in Tabasco, and 30 in the Northwest part of Guatemala (See the maps on www.ciepac.org).

The privatization is already under way and the transnationals, electricity vultures alter the riches of the poor countries of the world, surround the country and anxiously await that the legislators and their parties turn their backs once again on the people of Mexico with the Electrical Sector Reform so awaited in the country. If the Legislative Power does not know how to defend the sovereignty of the country, what other roads or alternatives do we have?

Sources: Federal Electric Commission (CFE); Alfredo Elías, Legal representative of the CFE; Mexican Constitution; World Bank; CIEPAC; Secretary of Energy; Energy Regulatory Commission; Newspapers and magazines: La Jornada, Milenio, Crónica, Reforma, Economista, Excélsior, Novedades, Financiero, Heraldo, UnomásUno, Sol de México, Universal, Ovaciones y Prensa, contents of the news summaries on CFE; Geographical Institute of the Autonomous University of Mexico, Expansión and CFE are cited on the maps elaborated by the investigador Andrés Barreda (www.ciepac.org pages on  “Mapas”).

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