Mexico City  - The Mexican government on Sunday closed a state-run energy distribution company with about 40,000 employees.

President Felipe Calderon said the company Luz y Fuerza del Centro, which provides electricity to the capital, would be closed because it was no longer economically viable and was suffering heavy losses. Officials sent 5,000 police to close the headquarters and branches of the company.

The closure comes amid a fight over the government's rejection of the reelection of a union leader.

Luz y Fuerza is the only energy distributor in the Mexican capital and several central Mexican states. Interior Minister Fernando Gomez Mont said energy would be provided to the region by the Federal Election Commission.

The presidential declaration came early Sunday and said "the financial and operational inefficiencies of the company" were to blame. This year alone, the government had to pay nearly 3 billion dollars to keep the firm afloat, Gomez Mont said. (dpa)