By ALEJANDRO ENVILA FISHER
The question that everyone in Mexico should be asking themselves is whether ordinary citizens are more interested in subsidizing, with their own paychecks and a reduced quality in their public services, an ideologized concept of national sovereignty as purported by President Andrés Manuel López Obrador (AMLO) and his so-called Fourth Transformation (4T), or paying less for reliable electricity, gas and gasoline.
The current debate over AMLO’s proposed electricity reform could serve to open a public discussion on the entire energy model promoted by the current government as compared to what was done in the past and was generically referred to as structural reforms.
AMLO’s supposed self-sufficiency for Mexico in gasoline production can be reduced to two simple options: either Mexico imports cheap gasoline from almost anywhere in the world or it produces it own expensive gasoline — paid for through subsidies or higher prices for consumer — using imported oil because Mexican refineries are not equipped to process the heavy crude that Petróleos Mexicanos (Pemex) extracts from the Mexican subsoil.
In the electricity sector, the dilemma is the same: The government can either commit to massify self-generation on a large and small scale, reserving a distribution monopoly for the state-run Federal Electricity Commission (CFE), cancelling existing and future permits and contracts with private generators and requiring all Mexicans to buy the electricity produced by the CFE, or maintain a free-market policy that respects contracts and clean energy options. The AMLO administration has made it clear that it prefers the prior option, which pollutes the environment and, above all, is very expensive, meaning that it ultimately will lead to the deterioration of public, business and individual finances.
The debate has reached levels of incredible and dangerous absurdities, fueled by lies and the manipulation of figures to promote a politically and socially accepted formula for discussion.
CFE Director Manuel Bartlett Díaz has particularly distinguished himself as a bearer of false facts. He is the promoter and disseminator of untrue and manipulated data, showcasing not only his propensity for discerption, but also his profound ignorance.
He is also the author of a dangerous barrage against Mexico’s rule of law. Bartlett has blatantly spoken against property rights and against compliance with the international commitments that Mexico adopted when it joined the global world of free trade.
He has repeatedly accused individuals and corporations of theft without any tangible evidence against them and he has endowed the president’s electricity reform with an expropriation and anti-business spirit that not even López Obrador has dared to allege.
Bartlett claims that private companies are “stealing” electricity and therefore pay less than individual consumers. But the fact is that these entities have neither stolen nor paid less per kilowatt than the average Mexican household. They pay less than high-consumption households, but more than poor and average households. Their so-called “preferential” rate is due to the fact that, as companies, they generate a good part of the electricity they consume, and they produce it at a lower cost than the CFE. If they generate it, then it is theirs. Which means that, despite Bartlett’s ravings against them, there is no theft, simply because it is impossible to steal something that is already yours.
Another aspect of the electricity reform is that it threatens to suspend the self-generation contracts that private companies have with the CFE. And since all these contracts have agreed sanctions applicable to whoever decides to abandon them, those sanctions would have to be paid or submitted to an international arbitration that would undoubtedly conclude that Mexico has breached the agreements.
But paying the sanctions — and they would represent a very heavy financial burden for the nation — would be minimal compared to the future economic damage that Mexico would suffer as a consequence. Unless Bartlett’s allegations and false claims are not reversed by the government, Mexico can say goodbye to investment grades and future injections of foreign capital investments.
As the Big Three international credit agencies (Moody’s Analytics, Standard and Poor’s, Fitch Ratings)have already pointed out — and which the passage of AMLO’s electricity reform would undoubtedly confirm — Mexico is a risky nation for investment because its government does not guarantee the legal security of investors’ assets, nor the property rights of individuals in general.
The consequences of strengthening that perception of Mexico — which began to take shape with AMLO’s cancellation of the $7 billion New International Mexico City Airport (NAIM) in Texcoco, even though it was already 70 percent completed — would condemn the country to economic stagnation and, consequently, and increase in unemployment and inflation.
Less investment means less growth, fewer jobs, less consumption and, of course, less tax revenues. In addition, it also leads to more poverty and more social insecurity due to an increase in crime and the lack of financial resources to combat it.
Manuel Bartlett Diaz’s lies and distortions of facts are eroding Mexico’s international image and credibility, and threatening the economic future of the country.
Whoever holds the crucial position of head of Mexico’s Federal Electricity Commission must have a solid knowledge of economics and administration skills, as well as cutting-edge legal and political training and a firm understanding that in the 21st century no country can grow and develop at odds with the international community.
Manuel Bartlett definitely does not fit the profile.