Mexico's President Looking to Revise Contracts with Private Pipeline Companies, TransCanada and Sempra Energy both Involved

Mexico’s President Andrés Manuel López Obrador said the Mexican government wants to revise natural-gas pipeline contracts with private companies where the state-owned electric utility is paying for fuel it has not received yet.

He said Grupo Carso , a conglomerate controlled by billionaire Carlos Slim, Sempra Energy ’s unit Infraestructura Energética Nova, or IEnova, and TransCanada are among the companies that are involved.

On Monday, the president lashed out at former government administrations and energy officials for “decimating the state power utility” through the privatization of the energy sector.

The current president is highly critical of any changes that would result in a reduction of the state’s control of the sector.

He added that there are currently seven nonworking pipelines for which the state-owned electric utility is paying. Under those contracts, the utility guarantees that it will use capacity on the pipelines and also has to pay if projects are interrupted for reasons beyond the control of the companies.

Despite this affecting the utility’s finances, the president hopes to reach voluntary agreements with companies to revise contracts without heading towards legal battles.

TransCanada said it welcomes the opportunity to work with CFE and the Mexican government to solve issues preventing the completion of projects in Mexico. But the payments are part of force majeure provisions included in the pipeline contracts, not fines or subsidies, TransCanada said. “Our commitment to Mexico is as strong as when we first arrived over 20 years ago”, TransCanada added.

The Wall Street Journala