There are several basic issues that have held up the consummation of investments in private electric power generation, but probably the most important one is the pricing of electricity. Hurricane Roxanne provided a recent example of the Government ordering the CFE to provide electricity at discounted rates for those in the disaster area. Understandably, Pemex is not keen on the idea of subsidizing the CFE, but neither does the Government want to guarantee any form of a dollar-indexed price of electricity in Mexico. The problem for investors and lenders in relation to a given project is to reach a consensus about how to understand Mexican risk. Depending on the measure of risk, developers will want the period of pay-back shortened, and lenders will want interest rates increased.
Mexican investors face an exchange-rate risk.
Conclusions Regarding natural gas, the issue of exclusivity in the new gas regulations will be easy to misunderstand. For the foreseeable future it is not realistic for Pemex to withdraw from interstate gas transportation. In the first place, there is no legislation authorizing Pemex to privatize its own pipelines. Even if there were such authority, however, the divestiture process would be lengthy and the outcome uncertain. The only real option is for Pemex to withdraw from local gas distribution, starting with its non-Pemex accounts.