Mexican president says Pemex to distribute gas to consumers

By Diego Oré and Ana Isabel Martinez

MEXICO CITY, July 7 (Reuters) - Mexican President Andres Manuel Lopez Obrador said on Wednesday that his government will create a new business within the state oil company Petroleos Mexicanos to distribute liquefied petroleum gas (LPG) directly to consumers.

Lopez Obrador, who has sought to strengthen the power of the highly indebted company, known as Pemex, said he aimed to protect the poor who are usually hit hardest by rising energy prices.

"Pemex is also going to take charge of (LPG) distribution," Lopez Obrador said at his regular news conference. "We're not going to take away the right to sell gas from distributors but there will be more control of supply and pricing."

Over the past year, LPG prices have increased more than 30% in some parts of the country, data from the government's consumer watchdog Profeco showed.

Lopez Obrador criticized private LPG companies for hiking the rates far above inflation, which is at 3.15%.

In Mexico, some 76% of households use LPG as their principal source of energy for cooking.

The new company would first start operating in Mexico City, where Lopez Obrador said gas prices were high.

"We've already done the study," Lopez Obrador said. "(Large distributors) don't even allow competition to exist, they control the territories."

He did not name the distributors.

Lopez Obrador, who took office in late 2018, has made a series of attempts to roll back the previous government's liberalization of the energy market, which aimed to increase private investment in the industry and boost competition.

Pemex would be a big winner from many of the proposed changes, some of which have stalled in courts or been struck down, at the expense of private competitors.

The president's shake-up of the energy market has upset some of Mexico's top trading partners, who argue the government is failing to properly respect contracts. (Reporting by Diego Ore and Ana Isabel Martinez Additional reporting by Adriana Barrera Writing by Stefanie Eschenbacher Editing by Sonya Hepinstall)