What does the reform of the energy sector in Mexico consist of?

( Spanish) – The plenary session of the Senate of Mexico approved this Thursday the constitutional reform initiative on energy matters that gives priority to the State in the generation of electrical energy. The reform now goes to state congresses for a vote.

The reformwhich modifies articles 25, 27 and 28 of the Constitution, grants the State responsibility for the energy transition towards renewable sources, and establishes that Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) are once again considered state public companies . In addition, it proposes that “in no case” will private companies prevail over state companies in various activities of the electrical industry. And that, in the case of lithium, no concessions will be granted to private parties.

Likewise, it establishes that the CFE must provide electricity at the lowest possible price, avoiding profit, to guarantee national security and sovereignty.

From her usual morning conference, the president of Mexico, Claudia Sheinbaum, said this Wednesday that the objective of this reform is for the CFE to have at least 54% of the energy generation and 46% can be provided by private companies based on planning. energetic and “very clear rules”.

The reform project establishes “that if CFE generation exceeds 50%, it is not considered a monopoly.”

Another of the modifications established in said initiative is the elimination of a paragraph of the Constitution that leaves the Mexican State “in charge of the energy transition” towards renewable and non-polluting sources, a provision that, according to the ruling party, exempts private companies from take responsibility for this work.

“In that paragraph it was not clear exactly what they were referring to, formally it was for the energy transition, but in the paragraph it is not clear if it was only the obligation of the State, the planning of the transition or also the production of all renewable energy sources ”Sheinbaum said.

The opposition points out that this reform will affect all Mexicans, because it may be more costly and less efficient.

“This reform returns us to an obsolete economic model that has already demonstrated many times its limitations and failures to the detriment of the family, community and national economy. It is known and known history that, under monopolies, the costs of all services tend to increase while quality decreases,” argued Citizen Movement senator Luis Donaldo Colosio Riojas, last Monday during the discussion of the opinion in Senate committees.

However, analysts warn about some “ambiguities” contained in this energy reform promoted by the ruling party, and which was sent on February 5 by the then president Andrés Manuel López Obrador to Congress within a legislative package.

Experts consulted by point out that, among the changes contemplated in the reform project, one of the most notable is the elimination in the constitutional text of the concept of “state productive companies” to establish “state public companies.”

“The implication, unfortunately, is very great, mainly because they can carry out and propose projects that do not have economic profitability,” Gonzalo Monroy, general director of the consulting firm GMEC and specialist in the energy sector, told .

Monroy said that, although the above can be considered “priority” or “strategic” for the country, this allows them to change the Budget and Fiscal Responsibility Law.

“This would mean that the Ministry of Finance, even knowing that it would lose money, would send it to the Congress of the Union for discussion and eventual approval,” Monroy noted.

Another point established by the initiative and highlighted by the analysts consulted is the prevalence of the public over the private in the electricity industry.

“The 54% (for the public sector) and 46% (for the private sector) of energy generation will surely be discussed, and eventually approved, in a reform to the Electrical Industry Law, a reform to secondary laws that will surely come in the coming months,” says Monroy.

Monroy points out that in this official initiative the concept of “prevalence” in energy generation seeks to “legally cover” the 2021 electricity reform presented by former President López Obrador and which was rejected in the Congress of the Union in April 2022.

López Obrador argued that the bill would have protected consumers and made the country more energy independent.

With the intention of reversing the 2013 electricity reform that liberalized the market, López Obrador’s initiative sought to have the CFE plants sell electricity before private companies, that is, it had the intention of limiting private participation in the sector. , canceling investment contracts.

Last week, during the presidential conference, the Secretary of Energy, Luz Elena González, ruled out that the energy reform privatizes energy generation in the country and, on the contrary, stated that it is regulating it.

González insisted that the generation of “clean and favorable energy” will be favored, which is why lithium and the internet are also considered “strategic areas of the State.”