By RICARDO CASTILLO
Just in case anyone doubts that Mexican President Andrés Manuel López Obrador (AMLO) is not a one-track-minded politician, he just proved again that they are wrong.
Ever since he launched his third run for president with the 2014 foundation of his political party National Regeneration Movement (Morena), the main focus of his discourse has been to salvage the two state-owned energy companies Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE).
His first political move with Morena was to demand a referendum be held on the Energy Reform proposed by former President Mexican Enrique Peña Nieto, which was aimed at dismantling the state-ownership of both companies. AMLO proposed holding his referendum during the 2015 elections.
Peña Nieto nixed the idea and went on carrying out divestment moves for Pemex and CFE with what AMLO called “rivers of money,” allegedly flooding the aisles of both houses of Congress to buy everyone’s vote.
With the idea of the 2015 midterm referendum vote out of the way, Peña Nieto continued carrying out his Energy Reform, with AMLO tripling his critiques and basing his third presidential campaign on a barrage of attacks on the negative aspects of the Energy Reform. He finally won the presidency.
With these events in mind, let us get back to the original suggestion that AMLO is a one-track-minded politician.
This week, a memo sent by him on July 22 to members of the National Hydrocarbons Commission (CNH) and the Energy Regulation Commission (CRE), which regulates both Pemex and CFE, points in the direction of further changes to the Peña Nieto Energy Reform. The end game may turn out to be a total recall of the reform.
The memo is also aimed at the National Center for Energy Control, not a regulation committee, but which filed suit at the Supreme Court against AMLO’s mandates, a suit against which the president is fighting back.
Here is a succinct. point-by-oint version of the issues touched on by AMLO in the memo:
- To maintain the policy of not increasing in real terms the price of gasoline, diesel, gas and electricity;
- To achieve self-sufficiency in all energy sources;
- To avoid exporting oil, to only extract as much as is needed for the refineries of the country, and to stop importing fuels;
- To apply the crude production program with a goal of 1.8 million barrels per day in 2020, 1.9 million in 2021, 2 million in 2022, 2.1 million in 2023 and 2.2 million by 2024;
- To continue the rehabilitation of oil refining and to reach by 2022 a level of crude processing of 200,000 barrels per day, and in that same year, to finish the construction of the Dos Bocas refinery, which will add another 340,000 barrels to the national output;
- To define “at the earliest possible date” the advantages of building a new refining complex at La Cangrejera, Veracruz, to achieve self-sufficiency in fuels before the end of the current administration (2024);
- To give priority to whichever is more profitable: building or rebuilding electrical generation plants to meet the demand of the southeast of the nation, in particular in the Yucatan Peninsula states, as well as to supply enough energy to the Baja California Peninsula;
- To enhance electrical generation by hydroelectric plants in the nation;
- To have Pemex and the CFE recognize contracts subscribed to during the previous administration, as long as they do not involve fraud against the public companies nor the nation.
- To prevent evidence of any alleged influence mongering and corruption;
- To eliminate subsidies to private companies in the energy sector;
- To have the national electricity system become self-sufficient in a) hydroelectric generation, b) generation from other CFE operated plants, c) solar and wind energies, and d) combined cycles privately supplied energy.
- To have the CFE develop a plan for the use and sale of natural gas acquired by the previous government, in order to avoid sanctions and exaggerated payments;
- To stop issuing permits or concessions to private companies in the energy sector due to over production of oil and electricity over a medium- and long-range period;
- To support Pemex and the CFE so that they do not continue to lose national market participation;
- To consider associating with private investors in oil extraction, refinement and electricity generation, as long as these are complementary actions that do not affect to national interest.
AMLO said that previously acquired contracts will be respected, but there will be no new tenders and the oil potential left out of those concessions will only be exploited by Pemex.
In terms of electricity, private participation will not be able to go over the 46 percent limit of national consumption.
As for petrochemical plants, public-private associations will be allowed, with even higher investments by private companies, so long as they do not imply suppling products to Pemex as happened in the case of the Etilene XXI plant (sold to Pemex at an exuberant price by Odebrecht).
At the end of the memo, AMLO told its recipients to consider these points of view ad to present a convenient course of action in a future meeting with him.
In short, AMLO’s proposal is to have Pemex and the CFE be what they were originally proposed to be during the Mexican Revolution, which laid out the framework for national ownership of all energy production.
The memo laid the groundwork to rebuke almost all of the Peña Nieto Energy Reform bill and to keep AMLO on track with the original intent of his presidential campaign.
There are people in the Mexican press who see the implications of this memo as a political tool to lead Morena to yet another victory in the 2021 midterm election.
The conservative National Action Party (PAN), which is the second-largest party in Mexico in terms of congressional seats, is against all of the above.
AMLO’s memo is the first step toward fully nullifying the Peña Nieto Energy Reform, which the PAN backed.
That is a different story.
…Aug. 6, 2020