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The Mexican president is moving to undo key energy reforms

The Mexican president is moving to undo key energy reforms

President Andrés Manuel López Obrador has stepped up attacks on Mexico’s energy reform by sending Parliament to Congress to suspend government permits to private companies in the hydrocarbon sector and allow them to hand over to the state oil company. Pemex more control.

Imports and exports of fuel and oil, storage and distribution permits could be suspended according to the bill, due to national security – a vague and discretionary definition, experts said, would increase uncertainty and alienate investment in the sector.

The bill is the latest attempt by nationalist López Obrador turn the clock and clarified the 2013 energy reform – which Pemex and CFE believed was an attempt to destroy state utility – without changing the constitution.

Earlier this month, Congress approved major changes in the electricity sector that would prioritize more expensive and dirty CFE generation over cheap renewable energy. After the resolution of the orders, it has now been that bill put on hold.

Friday’s bill would find no obstacles in Congress Lopez Obrador he has a majority in both houses. But analysts say it would also affect legal challenges.

The bill showed that López Obrador did not give up with the intention of recovering the state energy company as a rightful place in the heart of the economy. “There is no doubt about the main role that Petróleos Mexicanos should play,” he wrote in the introduction to the bill.

Banco Base economist Alfredo Sandoval has highlighted two other worrying elements. If the permit is revoked, the government could send it to a state-owned productive enterprise – as Pemex and CFE are known – to rectify things, but without affecting legal ownership.

“This means that if you revoke the permit for a gas station, Pemex can take the correction,” he said.

Furthermore, in making a proposal to revoke the rules in force, if the authorities do not respond to the request for authorization within 90 days, it would be considered that the authorization has not been granted.

“It’s a more effective way to deny permits,” Sandoval said.

Energy consultant Gonzalo Monroy has said the bill will not allow the government to suspend licenses granted to private oil companies at historic auctions after Pemex ended its eight-decade monopoly on the sector. But it can suspend permission to export crude oil produced by a company.

The reform also freed gas stations from the obligation to buy fuel from Pemex. According to the bill, analysts said these import permits could be put on ice.

“It is unfortunate that the Mexican government continues to pursue wrong energy policies that despise our health, the environment, competitiveness, investments, jobs, our laws and trade agreements,” said Armando Ortega, who helped negotiate free trade in Nafta Mexico. Deal with the US and Canada, now updated as the USMCA.

“Any cancellation can be understood as‘ equivalent to expropriation ’, in the investment chapters of the USMCA, CPTPP and Mexico-EU free trade agreements,” he added. “They have to be very careful.”

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