Mexico’s Natural Gas Dependency, AMLO’s Energy Policy Seen as Risks to CFE’s Rating

Moody’s Investor Services sees Mexico’s state utility as also facing risks due to pension-related debt

Cooling towers at the CFE's power-generation plant in Acolman, Mexico state. Photographer: Luis Antonio Rojas/Bloomberg
September 29, 2023 | 02:00 AM

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Mexico City — The energy policy of the government of Mexico’s President Andrés Manuel López Obrador regarding the electricity sector and the country’s dependence on gas are the main risks for the rating of the state-owned power utility Comisión Federal de Electricidad (CFE), according to Moody’s.

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Adrian Garza, an analyst at the ratings agency, said in a conversation with the media that high investment needs in the sector is one of the main risks for the Mexican company whose rating is ‘BBB-’ with a stable outlook, following his participation in a Moody’s forum in Mexico City.

“The government’s policy is for CFE to do the most, that in the short term can create a lot of pressure in terms of getting into debt,” he said.

AMLO, as the president is known, intends for CFE to control 54% of the electricity market, with the rest in the hands of the private sector.


Another risk identified by the Moody’s analyst is the company’s dependence on imported natural gas, since Mexico buys about 80% of the fuel needed to meet domestic demand in the United States.

The CFE generates 60% of its electricity with natural gas.

Despite the price exposure, Garza said the CFE has addressed the issue by contracting hedges that give it more visibility on the price.


The analyst also said that CFE’s pension liabilities are another “relevant” risk.

Moody’s kept CFE’s credit rating unchanged in August 2023 and highlighted the strength of the relationship between AMLO’s government and the state-owned company.

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