Loosing “Luz Y Fuerza Del Centro”

Loosing “Luz y Fuerza del Centro”
Comision Federal de Electricidad, Mexico’s largest state power company known as CFE, takes over Luz y Fuerza del Centro, the smaller money-losing state powersupplier. “This is a measure to preserve responsibly the fiscal resources of all Mexicans,” Fernando Gomez Mont, Interior Minister said.
Luz y Fuerza provided power to a metropolitan area of 20 millionpeople and several states surrounding Mexico City, transmitting 30 percent of the entire country’s electrical output. President Felipe Calderon issued a decree today ordering the liquidation of Luz yFuerza, according to a notice published in the nation’s official gazette.

The financial situation of Luz y Fuerza is unsustainable,
If Luz y Fuerza were left to continue operating, the federalgovernment would have to transfer about 300 billion pesos to the company by 2012.

Between 2003 and 2008, Luz y Fuerza generated sales of 235.7 billion pesos, while costs reached 443.2 billionpesos, according to Calderon’s decree. By June of 2009 the company reported a loss of 30.6 percent of the power that it distributed.
CFE and Luz y Fuerza are the only companies allowed to sell anddistribute power in Mexico. Private companies are allowed to generate power and sell it to the state-owned distributors or export the electricity.
Several Mexican politicians pledged to challenge theconstitutionality of the move, saying the federal government can’t dissolve a state-owned enterprise without congressional approval. An opposition Party of the Democratic Revolution congressman,Alejandro Encinas, said he and other legislators would prepare a constitutional challenge to reverse the decree, according to an e-mailed statement.
Electricity workers marched Oct. 8 in the capital toprotest the alleged government intervention in the labor union when labor authorities refused to recognize Esparza after a close election.

The liquidation of LFC will:...