By Beatrice E. Rangel
August dawned upon us with two game changing events. In Mexico President Pena Nieto reached the climax of his public policy raid by signing the supporting legislation to energy reform. And while oil has so far been the media darling in this plot, electricity has been kept in the dark for most of the legislative process that began ten months ago.
Electricity like Cinderella is essential to get any chores done whether at home or at work. But because it always is in the kitchen, few see the significance of its existence except when it fails.
The story of electricity in Mexico has been rather interesting. In Mexico, it came into being earlier than in many Latin American countries and was basically a private business. In fact, the Mexican electric power system can be traced back to the year 1879, when the first thermoelectric plant was launched to feed the energy demand of the textile and mining industries.
Driven by demand in these two sectors electric supply grew for over a century. Vertically integrated privately owned regional monopolies were the electricity suppliers in these early stages of development.
In the first half of the past century, the Mexican state took over electricity generation and distribution. While the ownership change did not hinder growth over the years, it did foster significant cost increases and inefficiencies that today represent a development burden for Mexico. These hold-backs include subsidies that represent a 27% revenue reduction thereby hindering further investments that have consistently fallen short of growth needs. . . Mexico: Electric Installed Capacity 1900-2000
In 2013, for instance, investments in the electrical grid represented US$2.5 billion while needs amounted to US$7 billion. Then come the energy losses caused by old, obsolete or poorly maintained equipment and outright theft through illegal taps. These take away another 21% of revenues.
This state of affairs needed to be redressed as demand for electricity is expected to reach 311,200 megawatt hours by 2019. Further, the FDI insufflated growth that is about to come might suffer from the electrical state of affairs. Time to bring Cinderella to the ball!!
Meanwhile, in Colombia, peace seems to have gotten a new chance.
Colombia’s president Juan Manuel Santos inauguration was the theater to remind FARC that it is about time to wind up peace negotiation. President Santos while praising in his inaugural speech progress so far made, warned FARC that the government will not simply be a silent witness of their violence spree.
By setting the mile markers for progress and indicating that Colombian productivity drive comes first in his list of priorities, Santos was telling his nemesis that they might have lost momentum. The odds that they listen are slim as the incentives to leave the lucrative drug traffic business to enter democratic competition are also slim. But one never knows what wonders can come from this chance at peace. Beatrice Rangel is President & CEO of the AMLA Consulting Group, which provides growth and partnership opportunities in US and Hispanic markets. AMLA identifies the best potential partner for businesses which are eager to exploit the growing buying power of the US Hispanic market and for US Corporations seeking to find investment partners in Latin America. Previously, she was the Minister of the Secretariat for Venezuela President Carlos Andres Perez as well as Chief Strategist for the Cisneros Group of Companies.
For her work throughout Latin America, Rangel has been honored with the Order of Merit of May from Argentina, the Condor of the Andes Order from Bolivia, the Bernardo O'Higgins Order by Chile, the Order of Boyaca from Colombia, and the National Order of Jose Matías Delgado from El Salvador.