• Opposition won’t back bill if regulators lose independence
• Electricity proposal probably won’t be passed, Eurasia says

Maya Averbuch and Amy Stillman, Bloomberg News

MEXICO CITY
EnergiesNet.com 03 10 2022

Leading opposition lawmakers in Mexico say they won’t back the government’s nationalist electricity bill unless it changes significantly, reducing chances one of the president’s most ambitious proposals is approved in congress any time soon.

The legislators – whose support is crucial for President Andres Manuel Lopez Obrador to get his bill passed – want to see modifications including preserving independent energy regulators and giving guarantees to private companies about their role in the market, among other concessions.

While the ruling Morena party aims to have a vote in the lower house by April, officials from the opposition Institutional Revolutionary Party, or PRI, which governed Mexico for most of the 20th century, have hardened their position and see the debate delayed until at least September, when congress reconvenes after regional elections.

“We’re not going to fall into a game of pressure by the party that controls the majority,” Pedro Armentia Lopez, a PRI lawmaker in the lower house’s energy committee, told Bloomberg News. 

“The reform will not pass as it is,” Mariano Gonzalez Aguirre, another PRI lawmaker, said.

The bill is one of the centerpieces of Lopez Obrador’s government and seeks to give the state-owned utility Comision Federal de Electricidad, or CFE, priority in the electricity market. The president made boosting state control of Mexico’s energy sector a key campaign promise, saying becoming self-sufficient would help revive the country’s economy.

Business leaders have warned the legislation, which limits the share of private companies to 46% of the total market, will hurt Mexico’s investment climate. Meanwhile, environmental activists fret that prioritizing the state utility’s aging facilities over private renewable energy projects could increase carbon emissions.

Morena and its allies have a majority in both chambers of congress but they need more than 50 votes from opposition legislators in the lower house and at least 10 in the senate to pass the bill, which requires a supermajority given it contains constitutional amendments. 

The uphill legislative process has led analysts at Eurasia Group to give the bill “very low odds of approval,” reducing the chances it passes to 15% from an estimated 30% last year.

There is “no indication that the ruling coalition is more willing to dilute the reform, nor the opposition to support it,” Eurasia’s Carlos Petersen wrote in a research note March 1. 

Read More: As Oil Soars, Is AMLO’s Fuel-Autonomy Push Looking Prescient?

Bill Changes

Among the changes to the bill requested by PRI lawmakers are ensuring renewable energy is a priority for Mexico and explicitly recognizing the role of private generators in the market. They also demand that the country’s regulatory bodies remain autonomous, including the Energy Regulatory Commission, the National Hydrocarbons Commission and grid operator Cenace.

In its current form, the bill proposes to fold the regulators into the Energy Ministry and CFE, effectively eliminating their role as independent oversight authorities. 

Yet so far Morena has conceded very little and AMLO, as the president is known, has tried to sway legislators using his political clout instead of seeking to negotiate with the opposition.

“When there is no intervention by the public sector, individual interests and a desire for profit predominate,” the president told reporters during his daily briefing on Tuesday. “I make a call to legislators to put public interest before all, the interest of the nation, not the interest of private companies.”

Morena’s Manuel Rodriguez, chair of the energy committee, promised that the legislation will provide assurances for private investments. 

Juan Ramiro Robledo Ruiz, chair of the constitutional affairs committee, said that the opposition’s proposals to modify the bill will be taken into account by the congressional committees in charge of presenting a new draft of the bill.

“All proposals to change the initiative will be considered,” he said in reply to questions.

bloomberg.com 09 03 2022