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Mexican president’s radical energy reform defeated in congress

Mexico’s opposition politicians have deprived the country’s nationalist president of the two – thirds majority he needs to change the constitution and implement a radical energy reform bill.

The reform, which would have guaranteed the state electricity group CFE 54% of the market, frightened the private sector, the opposition United States Government. Critics have argued that it is bad for investment, the economy and the environment.

The proposal is intended to change the regulatory landscape for electricity, including the abolition of electricity generation permits and the prioritization of CFE power over private renewable energy in the grid.

After a day of debates marked insults and chants, Mexico’s lower house voted in favor of the 275-223 reform, far less than the two-thirds majority required for constitutional change.

The result will be welcomed by most investors, but analysts expect the political and regulatory uncertainty in the sector to continue.

since Reform was proposed In October, business leaders, government and lawmakers negotiated behind the scenes and discussed in public. But the gap between President Anders Manuel Lopez Obrador’s visions and the opposition, which opened the energy markets to private investment in 2013, was too large to bridge.

Instead, Sunday’s vote was more on Lopez Obrador Raise a political point, Said analysts. The government wanted to present the opposition as representing the interests of foreign energy companies, while working for the Mexican people.

Lopez Oberdor has previously said that if the reform is rejected, he will immediately send a new initiative to Congress to nationalize the country Lithium resources.

“I said this in my update on Tuesday: Whatever happens we are protected from betrayal. Tomorrow I will explain it again,” he Wrote on Twitter On Sunday hours before the vote.

His coalition has a regular majority to pass secondary legislation. The issue is less immediate for the private sector, as the value of Mexico’s lithium, found mainly in hard – to – cut clay deposits, is unclear.

Lopez Obrador, who grew up in a country that produces oil and firmly believes in the state’s control of oil and electricity, thinks the liberalization of the sector has been tainted with corruption and has been too good for private companies.

“It’s not just another issue, another issue on the agenda, but it’s something in the heart[his]. . . The agenda, because it’s at the heart of Mexico’s history, “said Lorenzo Meyer, a historian who widely supports the Lopez Obrador administration.” The opposition can vote against the bill but not the idea. “

Energy experts agreed, expressing doubt that the sector would attract many investments even without the constitutional reform. Additional tools are available to the government, such as blocking permits through regulators and attempting to implement a secondary bill that the Supreme Court Not a statue In this month’s ruling.

“The energy sector will not change, it will remain as it was until now with no investment or with a very focused investment,” said Carlos Ochoa, a lawyer at the Netherlands and Knights firm in Mexico City who has worked for government companies CFE and Pamax.

According to him, the lack of a constitutional majority is also important for the wider economy and the investment climate. “This is a good message for other industry sectors to know that at least there are brakes and balances,” he said.

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