As Chris writes, this explains a lot. Free registration required for this New York Times article by Elizabeth Malkin, Mexico's Fox Proposes Opening Power Sector.

(In full below)

MEXICO CITY, Aug. 18 — President Vicente Fox is asking Mexico's divided Congress to change the constitution in a bid to attract billions of dollars in private investment to its state-run electricity sector, a move so far opposed by a majority of legislators.

The proposal would allow private investors to build power plants that would compete with the public Federal Electricity Commission to supply large industrial customers. The government estimates that Mexico needs investment of $5 billion a year over the next decade to modernize and expand the electricity sector to keep up with growing demand, money that would otherwise come from public spending.

"Imagine what we could do with these resources," Mr. Fox said before sending the bill to Congress late Friday. "I am sure we could resolve the enormous challenge of education. With these resources we could totally resolve the challenge of having an excellent health system with national coverage."

Mexico's business community and foreign investors have long made the overhaul of the state's antiquated electricity sector a crucial test of Mr. Fox's ability to deliver substantive economic change. In the two years since his election ended the 71-year-old rule of the Institutional Revolutionary Party, Mr. Fox has been unable to win approval for any significant economic proposal. Another failure would diminish his stature ahead of midterm elections in 2003.

Legislators from the PRI and the center-left Party of the Democratic Revolution have promised to fight constitutional reform of the energy sector. A two-thirds vote from Congress is needed for a constitutional change, so Mr. Fox will need to lobby heavily to win the PRI's support.

In April, a combined Senate committee voted to shelve earlier proposals for an overhaul, rejecting any possibility of a constitutional change. "There isn't going to be a constitutional reform," Senator Manuel Bartlett Díaz, a PRI stalwart, said.

Mr. Bartlett, as president of the Senate Committee on constitutional issues, leads the opposition to Mr. Fox's proposal. The electricity commission "is totally self-sufficient," said Mr. Bartlett, citing a litany of troubled Latin American electricity privatizations. "It has always had enough to keep up with Mexico's growth. It doesn't need foreign investment." However, the electricity commission says that its debt, backed by the Mexican government, represents 130 percent of its sales.

The PRI and P.R.D. have both presented proposals for revamping of the commission without recourse to private investment. The government argues that only private investment can meet the shortfall. Mexican per capita electricity consumption, at 1,997 kilowatt-hours a year, is less than one-sixth American consumption. "We want Mexico to shine like the U.S. and Europe," said the under secretary of energy, Nicéforo Guerrero.

Legislators from Mr. Fox's National Action Party argue that reform is necessary. "If there is good lobbying, good work, then the reform is possible," Senator Juan José Rodríguez Prats, president of the Senate Energy Commission. "The PRI needs to take a decision. Otherwise, the government could blame the PRI for being obstructionist."

Indeed, some PRI members have said they are open to discussing constitutional reform.

An earlier proposal circulated last week that would have opened petroleum refining and natural gas production to private investment. Mexico needs to expand natural gas production to supply power plants. Mr. Fox's proposal backed off from asking for changes in the petroleum, but the energy secretary, Ernesto Martens, said today that he expected Mr. Fox to soon send a bill on natural gas to Congress.

Modernizing the electricity sector has bedevilled successive governments for a decade. A 1992 law opened up power generation to the private sector, but limited investors to building plants for self-supply or for sale to the electricity commission under long-term contracts. Since then, plants with 18,000 megawatts of capacity have been built or are under construction with $10 billion in private investment.

The electricity commission estimates that an additional 29,000 megawatts of capacity are needed by 2011 over the country's existing 37,000 megawatts at a cost of about $30 billion. At least that much again will be needed to expand the distribution grid, provide maintenance and improve distribution.

Despite the 1992 law, Mr. Fox's predecessor, Ernesto Zedillo, was concerned that investment was not flowing fast enough to meet demand, which is expected to grow at 5.5 percent a year. He proposed a complex reform in 1999 which would ultimately have led to the sale of the electricity commission and the much smaller money-losing Mexico City distributor Central Light and Power. It sank in Congress. In response, Mr. Fox has pledged to keep both companies in state hands.