By RICARDO CASTILLO
There is no doubt that the Mexican Supreme Court’s harsh blow against President Andrés Manuel López Obrador’s (AMLO) Energy Bill on Wednesday, Feb. 3, which shot down 22 articles of the controversial edict pushed through last year by Energy Secretary Rocío Nahle, wobbled the administration.
The court voted against the bill because of what it considered radical changes to the Mexican Constitution in terms of how the state-owned Federal Electricity Commission (CFE) is becoming a monopoly, again.
The court’s ruling, however, is misleading.
At no point did the AMLO administration suggest barring the participation of private investment in Mexico’s electricity sector.
But during the administration of former Mexican President Enrique Peña Nieto (2012-2018), there were constitutional amendments that ideologically clashed with what many an opinion monger tends to call “socialism,” or even outright “communism.”
During the 2018 election, Mexico’s rightwing faction (whose views can readily be viewed in the opinions expressed in conservative publications such as El Financiero) was ousted from power by an overwhelming majority.
True, changes were made to the constitution that allowed foreign private investment in clean energies. But they were easier said than done.
As former U.S. President Bill Clinton once put it in a 2008 energy forum in Las Vegas (sponsored by then-Senator Harry Reid), “The problem with clean energy is that it needs a huge up-front investment, which prevents it from being an immediately profitable business.”
Last week, there was further criticism of the Mexican government’s route back to controlling the energy sector (electricity and oil), to the point of returning it to what it once was, a state-owned monopoly.
The U.S. Chamber of Commerce and the Wilson Institute issued harsh statements protesting against the AMLO administration’s electricity policies, demanding that existing clean energy, private investment contrasts be respected, at a humongous financial cost for the CFE.
That’s not a bad call, but under the United States-Mexico-Canada Agreement (USMCA), Mexico stated that it would keep strict control of its sovereignty over mining and electricity production.
Any complaint must be filed with the controversy panels specializing in UMSCA regulations, which will make a decision as to what’s right and what’s not.
The U.S. Chamber of Commerce and the Wilson Institute clearly ignored this provision in their claim that the Mexican government’s attempt to centralize control over electricity and oil violates the USMCA. They are not judges, but opinionmakers, and under international law must be considered as such. Of course, their views are heard and paid attention to, but their decrees are not the final judgement.
The Mexican Supreme Court’s ruling against the 22 energy ordinances issued by the nation’s Energy Secretariat is not the end of the road for AMLO’s energy plans.
The Mexican Chamber of Deputies is now discussing the electricity bill sent by AMLO, who has demanded that the bill be fast-tracked.
And since the president’s leftist National Regeneration Movement (Morena) party currently holds a majority (no matter how minimal) in both houses of Congress, most likely it will be.
The problem is that the hoopla created by the nation’s Chambers of Commerce alleging that it violates the USMCA which may or not be true.
The real situation is that this is now a on-going issue, and Mexico reserves the absolute right to make its own laws in accordance with its needs to keep an energy supply flowing for the proper functioning of its society.
True, investors in clean energy were led to believe by the Peña Nieto administration that they would be given preference to feed the CFE grid with their juice. This is the core issue of the conflict, and the way things look now, these investors might be out of business, at least in the short term.
Clean energy — however nice it may sound in theory — is not a current option for Mexico’s state-owned companies in Mexico.
Opting to foregoing clean energy now is a harsh reality, but the government must keep the country’s lightbulbs lit and gasoline in people’s car tanks.
Perhaps many outside observers do not understand the reality of the CFE’s and Pemex’s deep debt circumstances.
Both companies are swimming in rough financial waters, but as the old saying goes, in tandem with the president’s electricity bill, “you’ve gotta do what you’ve gotta do.”
…Feb. 8, 2021