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Mexico strikes deal with gas companies in pipeline row

media Mexican President Andres Manuel Lopez Obrador, pictured July 2019, said the deal would save the government $4.5 billion AFP/File

Mexico's president said Tuesday his government has reached a deal with gas pipeline operators to settle a dispute over contracts signed under his predecessor, defusing a row that had spooked investors.

President AndresManuel Lopez Obrador said the deal, reached with four companies based in the US, Canada and Mexico, would save the government $4.5 billion.

The leftist leader had rattled markets last month when his administration took the companies to court over their contracts to deliver gas to the public utilities company CFE.

The contracts were signed under former president Enrique Pena Nieto, but the current administration called them "exorbitant."

The government did not immediately release full details on the renegotiated contracts.

However, Lopez Obrador said the companies had agreed to take a profit cut of more than 30 percent.

"We owe our thanks to the goodwill of these business executives, who were willing to hold talks to reach an agreement and put the national interest first," Lopez Obrador told a press conference.

He gave special thanks to Mexico's richest man, Carlos Slim, whose Grupo Carso was one of the companies involved.

Standing beside the president, Slim -- the world's fifth-richest person, according to Forbes magazine -- said the deal would enable Mexico to reap the benefits of cheap gas imports from the United States, where a shale gas boom has sent prices plunging.

"This will enable (Mexican power plants) to replace diesel and fuel oil, which are not only more expensive but also polluting," said Slim.

It is not the first time the billionaire has found himself in the firing line of the anti-establishment president's policy overhauls.

One of Lopez Obrador's first moves after winning election last year was to cancel a new $13-billion airport for Mexico City whose chief backer was Slim.

But Slim treaded carefully at the press conference, saying he "agrees 100 percent" with the new government's agenda and expressing his confidence in the Mexican economy -- whose growth officially stagnated last quarter, in a blow to Lopez Obrador.

The other companies involved in the gas deal are TransCanada and IEnova, a subsidiary of US-based Sempra Energy.

Mexican firm Fermaca is also due to take part, officials said.

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