Why Is AMLO Trying to Roll Back Mexico’s Energy Reforms?
Mexican President Andrés Manuel López Obrador has submitted to Congress a bill that seeks to bolster the state’s role in the fuels market, including by possibly taking over operations run by private businesses. The move follows another effort by the president to partially roll back the 2013 energy reforms that opened the country’s energy sector to foreign and private investors, through a recently approved law that favors state utility CFE over private electricity generators. What is the reasoning behind López Obrador’s efforts to strengthen state entities in the energy sector? To what extent are upcoming midterm elections, in which Mexicans will choose legislators, governors, state lawmakers and mayors, influencing the president’s recent and intensified moves to modify the energy reforms? What are the measures’ major implications for international and private companies operating in Mexico, and particularly for firms’ carbon emissions reduction goals?
Greg Ahlgren, partner at Diaz, Reus & Targ: “AMLO’s policy proposals seek to energize support for his party prior to the midterm elections in June. Consistent with his nationalist approach to economic matters, AMLO is promoting energy independence as a national objective. Not surprisingly from a government that frequently reminds world leaders of Mexico’s sovereignty, AMLO has made a point to consolidate a variety of functions under state-controlled institutions, and his current proposals in the energy sector exemplify this. By favoring the CFE, he will also greatly benefit Pemex (and its huge…”Read More
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