US Envoy Warns AMLO’s Energy Reform Could Stall Investment

U.S. Ambassador to Mexico Ken Salazar. Photo: Google


U.S. Ambassador to Mexico Ken Salazar — who in February stirred diplomat waters by contradicting the Joe Biden administration when he said that Mexican President Andrés Manuel López Obrador (AMLO) “is right” about his country’s energy sector requiring reforms — said Friday, March 18, that the president’s reform will discourage investment in Mexico.

Salazar said that AMLO’s proposed energy reform — which would prioritize energy sourced from state-run carbon-based sources over private clean energy sources — must take into consideration the concerns of the U.S. government and companies on “difficult issues” such as contracts and permits.

Otherwise, Salazar said, “there will be no confidence in investing in the Mexican economy.”

In a forum of the Atlantic Council in Washington, where he was accompanied by  Mexican Ambassador to the United States Esteban Moctezuma, who defended the reform, Salazar said he “understood that Mexico is a sovereign country,” but insisted that the concern of the United States is that the outcome of the reform could impede the integration of supply chains between the two countries.

“We need to work on many difficult issues, one of which has to do with contracts and permits,” he said.

“We are pressing for the resolution of these issues. Hopefully there will be a resolution because otherwise (investors) cannot have confidence in investing in Mexico.”

Salazar said he recognized AMLO’s “openness” with the special envoy for climate change John Kerry, with the Energy Secretary Jennifer Granholm and with himself.

“We have all expressed our real concerns. In the State Department world they call it ‘concerns.,’ I call it tremors,” he said.

Also speaking at the conference, several bank executives warned that the lack of definition within Mexico’s energy sector is causing “a significant drag” on private investment, which is being reflected in low growth.

The proposed electricity reform will drive away $3 billion a year from the wind sector, several bankers said.

“We expected that a very important part of the investment in Mexico would go to that sector (electricity) and since that is not materializing, we are seeing a significant drag on Mexico’s economic potential,” said Jorge Arce, CEO of Grupo Financiero HSBC México.

In a separate interview, Adrián Otero, CEO of Scotiabank México, explained that the energy sector is key to the country’s growth, since productive activity requires electricity, gas and oil to operate, so it is urgent to have clarity in the sector as soon as possible.

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