higher prices for excess energy use. The low tariffs, together with LFC's inefficiencies, absorb a large amount of fiscal resources. For 2008, it was estimated that the subsidies paid through electricity tariffs to final CFE and LFC consumers by the Federal Government amounted to US$10 billion (close to 1% of GDP). Investment and Financing Investment by sub-sector Necessary investment to carry out the 2008-2017 expansion plan amounts to MXN 629,106 million (US$47 billion). The breakdown of the investment is: 41.2% for generation, 21.2% for transmission, 23.9% for distribution, 11.8% for maintenance and 1.9% for other needs. From the required total, 33.9% corresponds to OFP (Obras Públicas Financiadas or Financed Public Works), 8.8% to Independent Power Production, 51.5% to budgeted works and the remaining 5.9% to financial schemes still to be defined. Financing Pidiregas In 1995-1996 the Mexican government created Pidiregas ("Proyectos de Inversión Diferida En El Registro del Gasto " – Investment Projects with Deferred Expenditure Registration) to finance long-term productive infrastructure projects. Due to budgetary restrictions, the government realized that it could not provide all the resources needed and decided to complement the public sector's efforts with Pidiregas, a deferred financing schedule. This mechanism, which only applied to investments carried out by PEMEX(Petróleos Mexicanos) and CFE aimed to create the conditions for the penetration of private initiatives in hydrocarbon exploration and electricity generation. Pidiregas have been extended and have also grown in amount (PEMEX uses them for as much as four times the amount of CFE), although the original motivation for their existence is gone. Following a project finance scheme, for a project to be executed under Pidiregas, the resources that it generates from the sale of goods and services have to be enough to cover the incurred financial obligations. Projects are paid with the revenues generated during their operation and require the signature of a contract in which a product or work is involved. The State assumes the risk since PEMEX or CFE sign the contract as guarantee, while the investors recover their investment in the agreed time. As a result, Pidiregas cannot be considered as true private investment since, under true private sector participation, firms would make investment decisions and bear the full risk. The viability of the program has been questioned as its effect in the public budget is similar to the emission of public debt. Furthermore, until 2006, the Pidigeras scheme resulted in losses. Grid