Politics: Exploring various scenarios as to how the electricity sector reform might play out

MEXICO - Report 12 Oct 2021 by Guillermo Valdes and Francisco González

When President López Obrador unveiled at the end of September his package of constitutional reforms designed to turn back the clock and reassert state control over the electric power sector, it might have seemed like a politically reckless move. He had been promising such a reform proposal for weeks, but given the amount of resistance he could expect from the private sector and much of the country’s political class, and with his governing coalition lacking the necessary two-thirds majority in both chambers of Congress, the probability of an easy approval was very low. But he made his calculations clear the very moment he announced the reform by raising the possibility that the PRI might deliver the necessary votes, adding that he would do whatever was necessary to win the party’s support.

And while the two other members of the opposition alliance in Congress (PAN, PRD) and the Citizens Movement party all expressed adamant opposition, the PRI’s national president said his organization was willing to study the reform and hold a series of public forums to hear arguments both against and in favor. It seems ironic that the party that seven years earlier led the charge for the then-president Peña Nieto’s energy reform, which formally opened the sector to private competition, should now consider signing onto a proposal designed to dismantle it.

The fate of AMLO’s proposal clearly has sweeping implications for the future of the energy sector and the entire Mexican economy and exposes the government to considerable litigation not only from companies holding contracts but also from other countries with which Mexico has trade and investment agreements.

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