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Comments made by neveslaw

Sempra Impasse in Ensenada Raises Questions

I listened to the Editor's Roundtable this morning and I felt you missed what is actually occurring. Have you ever wondered why Canada has such a vibrant economy and Mexico does not, especially in the Baja region. Every 6 years, Mexico's central government is completely changed. This fact, among others, creates uncertainty. Because of this, foreign investment has always been difficult although things have changed somewhat post NAFTA. Now take Sempra's case. Let's assume for the sake of argument that all the allegations of corruption are true. You have a completed multibillion dollar facility built by foreign capital of which, I understand, provides 50% of the LNG to Mexico. Is the appropriate remedy to shut down the facility? Is this an attempt to extract money from Sempra? After all the permits are issued, construction is completed and operations are underway, a politian of a small city cries foul and unilaterally attempts to stop operations. Such a situation could never occur in the US because of due process rights; and that is the rub with Mexico. Unfortunately, Mexico has a long history of this type of conduct which makes investing in that country problematic, although for some reason Japanese and Chinese entities do not seem to experience the same difficulty. If there is an issue regarding the issuance of any permits, it may be investigated, litigated and appropriate action taken if necessary. Sempra is a well-run S&P 500 company despite the bad press it receives. It will be interesting to see what Mexico City eventually does although it is doubtful any adverse action will be taken. If you want a good coastal enviromental story, you should research the proposed development plans for the area below Punta Colonett which is about 40 miles south of Ensenada.

March 4, 2011 at 11:16 a.m. ( | suggest removal )