On 4 August a memo sent by Mexico’s President Andrés Manuel López Obrador to officials in the country’s energy sector regulatory bodies, asking them to “adjust” to his government’s energy policy, became public.
Analysis:
The emergence of the memo has heightened concerns over López Obrador’s apparent intention to in effect revert Mexico’s 2012-2013 energy sector reform. The reform opened Mexico’s energy sector to increased private participation in a bid to attract more investment to revive a flagging industry. López Obrador is a staunch critic of the reform, which he says is not in the national interest and has been adamant that his administration’s objective is to strengthen the state-owned energy firms and protect them from private competition. The worry is that the systematic attempts to undermine the reform will discourage private investment not just in the energy sector but in Mexico in general.
- The López Obrador government has set back the expansion of private sector participation in the energy sector through the cancellation of contracts, the suspension of scheduled tenders for hydrocarbon concessions, and more recently through the adoption of controversial new regulations for the electricity market. Various legal challenges have been raised against these actions, with the supreme court (SCJN) currently reviewing the constitutionality of the electricity market regulations.
- However, López Obrador insists that his government will continue to pursue its objectives of defending Mexico’s energy sovereignty by reinforcing the state-run oil firm (Pemex) and the state-run electricity firm (CFE). In the memo dated 22 July but made public yesterday, the president urges officials in the national hydrocarbons commission (CNH), the national energy commission (CRE), and the national centre for electricity control (Cenace) to follow his government’s energy policy and stop the “privatisation of the energy sector”.
- The CNH, the CRE, and Cenace are independent federal government entities. Nevertheless, in his memo López Obrador says that these “must adjust to the new energy policy and that their mission should be to join forces with the energy ministry, Pemex and the CFE to rescue the oil and electricity industries”.
Looking Ahead: In the memo López Obrador does say that regulators must act within the existing legal framework, but he does not rule out promoting new “constitutional reforms” to achieve his government’s energy policy objectives if necessary.