The logo of Mexico’s state-run electricity utility known as the Federal Electricity Commission, or CFE by its Spanish acronym, is seen outside its Mexico City office, August 27, 2014. REUTERS/Edgard Garrido
MEXICO CITY (Reuters) – Mexican President Andres Manuel Lopez Obrador said on Tuesday he will respect contracts that companies have with state-run power utility CFE for pipelines that are not operational despite his criticism of how much the arrangements cost.
On Monday, the government said Mexican billionaire Carlos Slim’s Grupo Carso, TransCanada Corp and Mexican energy infrastructure firm IEnova were receiving billions of dollars for unfinished pipeline projects.
Shares in TransCanada were up 0.5 percent and Grupo Carso rose 1 percent on Tuesday morning. IEnova which fell as much as 7 percent on Monday, was down 0.78 percent.
Lopez Obrador, who vows to separate business from politics, has suggested that the close ties between former government officials and the private sector led to energy deals that are unfavorable for Mexico.
His government, which took office in December, has rattled markets with signals it wants to further regulate the mining and banking sectors, and by cancelling a partially built $13 billion airport project.
However, he has been at pains to make clear that his government will adhere to the law and not break contracts signed by his predecessors.
“Contracts will be respected because they’re commitments that were signed in very special situations,” Lopez Obrador told a news conference, adding that he wouldn’t fight the companies legally. “Nobody is going to be vetoed.”
Reporting by Daina Beth Solomon; Editing by Frank Jack Daniel and Jeffrey Benkoe