LPG Lobby Stymies Tractebel Natgas Development

Lobbying from LPG (liquefied petroleum gas) distributors in Mexico's Guadalajara state is the reason behind a municipal decision to suspend work by Belgian energy company Tractebel to build out its natural gas distribution network, the president of Mexico's natural gas association (AMGN), Marcelo Chauvet, told BNamericas.

Tlaquepaque municipality's president Alvarez Hernandez suspended the work last week on the grounds that Tractebel is using plastic pipes while municipal guidelines call for steel pipes. But plastic pipes have been the international norm for the last 12 years, Chauvet said, adding that with municipal elections coming up in July, Hernandez' argument is a pretext to support LPG (liquefied petroleum gas) distributors who are politically influential in the area. "LPG is being dramatically displaced by natural gas and this is how [LPG] distributors are reacting," Chauvet said, adding, "it's a pretext that they are using to try and stop natural gas expansion, by taking advantage of the ignorance of local authorities about international norms." "That the local norms have not been updated is not the fault of the distributor," Chauvet continued.

Hernandez' move could mean a two-month suspension for Tractebel. Although national energy regulator CRE has issued 21 gas distribution permits in Mexico between 1996 and 2000 under internationally accepted norms, these permits are subject to local municipalities with antiquated regulations and inefficient bureaucracies, Chauvet said. Distributors have promised to supply gas to about 2 million clients by 2005, but with opposition from local municipalities, like Tlaquepaque, that target will not be reached until 2007, Chauvet said. However, natural gas distributors will inevitably conquer LPG and reach their target, "but the learning curve will be longer," he said. "It's a normal process of change in a country that has always been very centralized in terms of energy, and that takes some work," he said, adding that local authorities must learn to abide by international norms rather than putting obstacles in the path of foreign distributors.

Apart from Guadalajara state distributor EGJ, Tractebel owns Tampico city distributor GNP and Queretaro state distribution concessionaire Digaqro, and aims to have 260,000 clients by 2005. Digaqro had aimed to have 50,000 clients by February 2004, but already has 42,000, Digaqro director Marcelo Coppellotti told BNamericas, adding that the company is signing up about 2,000 new customers a month in 2003 instead of the anticipated 1,500. Digaqro has achieved market penetration of 60-70% in Queretaro.

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