- Title: MEXICO: Government shuts down inefficient state power utility
- Date: 12th October 2009
- Summary: MEXICO CITY, MEXICO (OCTOBER 11, 2009) (REUTERS) GENERAL VIEW OF FEDERAL POLICE ARRIVING TO BUILDING OF LUZ Y FUERZA DEL CENTRO VARIOUS OF POLICE CORDONING OFF AREA SURROUNDING BUILDING GENERAL VIEW OF NEWS CONFERENCE (SOUNDBITE) (Spanish) INTERIOR MINISTER FERNANDO GOMEZ MONT SAYING: "In the next few hours the conduct of all parties should be framed within the law, (all parties) should search for mechanisms of dialogue in order to resolve the differences and controversies that may arise and the government's disposition is to respect the right to protest by all members of the union." GENERAL VIEW OF REVOLUTION PLAZA WHERE WORKERS ARE GATHERING POLICE HELICOPTER FLYING OVERHEAD WORKERS PROTESTING AGAINST CLOSURE (SOUNDBITE) (Spanish) ELECTRICAL WORKER ALEJANDRO GOMEZ SAYING: "The government is looking to convert this into a social problem and to create problems with the working class, the people who lack a government economic package, the ones who have to sacrifice are us. We have to tighten our belts." GENERAL VIEW OF WORKERS PROTESTING POLICE OUTSIDE BUILDING POLICE GOING INSIDE BUILDING VARIOUS OF POLICE SECURING PERIMETER OF BUILDING GENERAL VIEW OF THOUSANDS OF ELECTRICAL WORKERS MARCHING VARIOUS OF DEMONSTRATION WORKERS SHOUTING ANTI-GOVERNMENT SLOGANS VARIOUS OF POLICE STANDING BEHIND ANTI-RIOT FENCES (SOUNDBITE) (Spanish) LAWYER OSCAR ALZAGA SAYING "The decision they made by decree to make the company disappear does not have any legal base. It is obligatory for it to go through Congress for its approval and the President (Felipe Calderon) is upsetting the process." WORKERS PROTESTING POLICE GUARDING BUILDING
- Embargoed: 27th October 2009 12:00
- Keywords:
- Location: Mexico
- Country: Mexico
- Topics: Domestic Politics,Energy
- Reuters ID: LVADD7YUEUDXKJBA2JW3U7DZJC1L
- Story Text: The Mexican government announced the closure of the inefficient state-owned company that supplies electricity to Mexico City and its surrounding area on Sunday (October 11), a move that could trigger labor strife.
Preparing for trouble, riot police occupied installations of Luz y Fuerza del Centro (LFC) on Saturday night before the issue of a decree ordering its absorption by the Federal Electricity Commission, Mexico's main state power utility.
President Felipe Calderon has singled out LFC in recent weeks as a prime example of what is wrong in Mexico's public sector.
The government said it was liquidating LFC because it wastes huge amounts of electricity due to inefficiency, and also because of its high costs and operating losses.
"In the next few hours the conduct of all parties should be framed within the law, (all parties) should search for mechanisms of dialogue in order to resolve the differences and controversies that may arise and the government's disposition is to respect the right to protest by all members of the union," Interior Minister Fernando Gomez Mont told reporters.
Following the announcement, thousands of workers took to the streets of Mexico City to protest against the decision while anti-riot police cordoned off the building in order to protect it from any rioting.
"The government is looking to convert this into a social problem and to create problems with the working class, the people who lack a government economic package, the ones who have to sacrifice are us. We have to tighten our belts," worker Alejandro Gomez told Reuters.
Keeping LFC running has represented a growing fiscal burden, especially as Calderon's government pushes for an austere budget that will raise energy costs and taxes next year to offset lower oil production.
Finance Minister Agustin Carstens told reporters it will cost about 20 billion pesos ($1.5 billion) to shut down the utility and pay off its 47,000 employees.
"The decision they made by decree to make the company disappear does not have any legal base. It is obligatory for it to go through Congress for its approval and the President (Felipe Calderon) is upsetting the process," another protester, Oscar Alzaga, said.
LFC's cost base has been swelled by a huge workforce, a generous retirement scheme and rampant electricity losses due to theft and technical problems.
Despite regulated electricity tariffs, Mexican businesses pay some of the highest power rates in Latin America, according to the World Bank. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2011. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None
