May 19, 2022

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AMLO’s power reform: why was it rejected?

(CNN Spanish) – The power reform, presented by President Andres Manuel Lopez Obrador, was rejected by the Mexican Congress this weekend after months of criticism from environmentalists and businessmen who sought to increase government control over the country’s energy production.

The president’s plan is one of his biggest challenges, and his rejection marks a major legislative failure in the three – and – a – half years of Lopez Obrador’s government.

Here is what you need to know about controversial reform: what happened, what was proposed and how the process went.

What became of power reform?

Lopez promoted constitutional reform in electricity matters as “important” for his plans to “transform” Mexico, and this was one of his biggest government challenges. The president argued that the bill would protect consumers and make the country more energy free.

But after a heated debate in Congress’ chamber of deputies (lower house) lasting more than 12 hours this Sunday, the opposition came together to seek to withdraw the bill, which they said would be detrimental to investment and violate international obligations.

The ruling Morena Party and its allies fell short of a two-thirds majority in the 500-seat House of Representatives to just 275 votes.

This is how the debate over power reform in Mexico goes 4:07

Alejandro Moreno, leader of the Institutional Revolutionary Party (PRI), told reporters on Sunday that “today will be a great day for Mexico to make it clear that reforms can be prevented by our votes and the Va Por México alliance at will.”

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During the debate over the initiative, protesters outside the congressional headquarters in Mexico City were asked to vote in favor of the reform. Opposition groups called for a boycott of the assembly a day earlier, saying “there is no room for complacency on the part of the people.”

What did the electricity reform propose?

With the aim of transforming the 2013 electricity reform that liberalized the market, Lopez Obrador’s reform proposal was aimed at restricting the participation of state Central Electricity Authority (CFE) plants in the sale of electricity to foreign power companies, i.e., private participation. Department, cancellation of investment contracts.

“The big power producers in this country are foreigners. It presents the problem of energy sovereignty and national sovereignty,” Angel Balderas, a proponent of reform and a professor at the Autonomous University of Guerrero, told CNN.

According to Balderas, private companies in Mexico, mainly foreign, dominate 68% of electricity generation, while the Mexican state accounts for only 32%.

“By the end of the decade, foreign private companies are projected to dominate only 85% and CFE 15%. This clearly indicates who is going to dominate the rates,” he said.

Delegates will vote on AMLO’s proposal 7:04

Opponents of the reform, however, said the initiative would encourage the production of expensive and dirty energy, which, in addition, would alienate investment and not promote competitiveness, which Lopez Obrador denied.

“CFEs have complete control over everything else, which means they distribute and transmit energy. The only thing we hear is that they buy cheap energy from environmental sources, which is what we need today with the 2030-2050 agenda. This country is promising. They will not rescind established agreements with investments, “Jose Aboukaber, president of Mexico’s Confederation of Industrial Chambers (CONCOM), told CNN.

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It proposed that the initiative not only regain control of power generation, but also exploit lithium, a mineral used in the manufacture of electric batteries, exclusively by the government. As well as the abolition of independent regulatory bodies by transferring energy regulations to state regulators. These are the National Hydrocarbons and Energy Regulatory Authorities and the National Energy Regulatory Center, which regulates the supply of electricity to systems and tariffs.

How was the process?

At the end of September 2021, Lopez Obrador submitted his power reform proposal to the Chamber of Deputies. Therefore, the President promised that it was “not about nationalization or stabilization, but about giving the CFE its place”.

From the outset, the controversial bill has drawn criticism from business groups, the United States, Mexico’s main trading partner, and other allies who have argued that it violates the US-Mexico-Canada agreement. Become a T-MEC or USMCA.

Business leaders and foreign officials have expressed concern that the bill could hamper and induce private investment International legal conflicts.

John Kerry arrived in Mexico after the controversy over Ken Salazar 1:45

Faced with criticism, the ruling Morena Party and its allies invited congressional power companies to participate in the debate and agreed to delay the passage of the law until April 2022, the same month as the referendum to withdraw Lopez Obrador’s order.

The party expects a landslide victory in the referendum for Lopez Obrador, a senior Morena politician, to Reuters, which will boost the government’s efforts to implement the reforms.

A few weeks ago, on April 7, the Mexican Supreme Court blocked the opposition’s first attempt to stop the electricity industry law. With four votes in favor and seven against, the nation’s Supreme Court has ruled that reform of labor law should not be declared unconstitutional.

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The Supreme Court allowed the cancellation of existing contracts between CFE and private mills in some cases. This created fear among traders as their investments were affected.

Mining law is advancing in the House of Representatives

This Monday, the full session of the House of Representatives of Mexico approved the draft decree amending and incorporating various provisions of the Mining Act with 275 votes in favor, 24 votes against and 187 votes absent. The bill was sent to the Senate for review and was eventually sent for approval..

The initiative was sent out by President Lopez Obrador on Sunday night and in his statement of reasons he pointed out that the purpose was to establish the exclusiveness of the Lithium nation’s tradition and its exploitation, exploitation and use. By the Mexican state.

In addition, concessions, licenses, contracts, permits, assignments or accreditations to national or foreign persons are prohibited in this case.

Information by Rey Rodríguez, Carmen Aristegui and Gabriela Frías