Page last updated at 06:14 GMT, Tuesday, 13 October 2009 07:14 UK

Fury at Mexico power firm closure

Police outside the firm's Mexico City offices
The government denies that it wants to privatise the firm

Workers have staged protests in several Mexican cities against a government decision to dissolve a state-run energy distribution firm.

The powerful Electrical Workers' Union declared a state of emergency after federal police seized the offices of Luz y Fuerza del Centro on Sunday.

The government accuses the firm of wasting billions of dollars on inflated salaries and pensions for employees.

Unions have called for larger demonstrations for later in the week.

The Mexican government says that spending at the company, which has about 40,000 employees and 25 million customers, was increasingly outpacing sales.

The firm faced an "unsustainable financial situation", President Felipe Calderon said.

'Bottomless barrel'

The union has called for a mass protest in Mexico City on Thursday. Its general secretary, Martin Esparza, said it could attract as many as 100,000 people.

However, the main employers' organisation, Coparmex, has welcomed the government's decision to take charge. Its president, Ricardo Gonzalez, described the company as "a bottomless barrel".

Mexico is trying to cut public spending to offset falling oil revenues.

The Federal Electricity Commission, a state-run utility that provides electricity across the rest of the country, is to provide services to Luz y Fuerza's customers.

The firm's costs between 2003 and 2008 were 433bn pesos (£20.6bn; $32.5bn) while its sales were 236bn pesos, the government said.

Mr Calderon said the utility company could not continue to be funded without increasing electricity rates or taxes.

"That would be unfair particularly when our country is going through tough economic times," he said.



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