EconomyFinancialAMLO has a plan B to promote his electricity...

AMLO has a plan B to promote his electricity policy after the refusal of his reform

The omen was fulfilled. The announcement of the opposition parties about a rejection of the so-called electrical reform became tangible yesterday in the Chamber of Deputies The calls to vote in favor of the document did not take effect and President Andrés Manuel López Obrador experienced what was his first great defeat in the legislative.

The president had in after multiple attempts that were stopped in courts and that ended up not being applied. Yesterday’s snub in the Chamber of Deputies leaves the executive, at least for now, with fewer legal instruments to impose his energy vision, say specialists.

The president’s speech on the need to reform the Constitution was lowering a bit in recent days, after the discussion on the reform of the Law of the Electricity Industry in the Supreme Court and his decision not to make the changes of the legal order and not declare it unconstitutional. The president described the decision as a triumph and said that with it they could “carry the CFE forward, rescue the public company and maintain the commitment not to increase the price of electricity.”

But what follows is still uncertain, say the lawyers in the sector, and the Court’s ruling does not exactly mean a victory for the Morenista administration. Despite the declaration of the highest body in judicial matters, the changes still cannot be applied, not while there is an amparo process.

Apart from that, the way forward is still difficult to predict. For some, the market has already been practically fragmented and the rejection of the constitutional reform will not mark a great change in the dynamics. “The pounding has generated that there is no new investment in generation projects. What it seems to me is that they don’t need to do much more to keep the market in the state it is in right now,” says Julia González Romero, a lawyer in the sector. “The administrative measures that have been taken have achieved the public policy objective and in this sense, public policy has been closely aligned with the discourse of promoting CFE participation.”

For others, the path lies in waiting for the conditions to exist to implement what is contained in the reform of the Electricity Industry Law (LIE) or to once again promote changes to secondary laws , for which the president does not need a qualified majority. in Congress, which they don’t have right now. “There can still be (changes to secondary laws), but the cost and political wear and tear would be high,” says a lawyer from the sector who works closely with companies in the market, but who has asked not to be quoted.

The reform of the Electricity Industry Law

The Court’s decision on the LIE gave the Obradorista government a break. The initiative approved in March of last year in Congress contains the essential parts of the presidential electricity policy: the change in the order in which electricity is used and the cancellation and review of contracts.

But the changes are far from being launched. Although the secondary reform was not described as unconstitutional, the new rules cannot be implemented while there is at least one general suspension granted to any company or organization. Doing so would represent contempt for a protection sentence, the lawyers explain.

The amparos continue their progress for now and the courts and tribunals will have the last word. Although there was no declaration of unconstitutionality, the majority of the judges gave their vote for it to be so declared and that precedent could weigh on the decision of the rest of the judicial power agencies.

There is another possibility, although it is a little more remote: a refusal of the protections and an implementation of the changes. But there a new wave of protections by private parties would come again, to now try to stop the legislation, but now individually. A circle that could seem to have no end. “If you continue to have a law that is clearly unconstitutional, tomorrow anyone can challenge it and clearly they will be able to win it,” says Daniel Sánchez, a lawyer at Backer & McKenzie.

This week another discussion in the Supreme Court could set a precedent. The ministers will discuss two constitutional controversies presented by the Federal Economic Competition Commission and by the state of Colima that argue that the executive exceeded its powers by sending the initiative. If a majority is reached in the Court, the reform to the LIE could be declared unconstitutional and its effects would be general, nothing of the provisions of that document could be applied.

Reform to the Mining Law to guarantee exploitation of lithium

As for lithium, also a core issue for the administration, it seems that the president has already shielded himself. A few days ago he left an initiative ready and signed to reform the Mining Law, and it is the government that takes the reins in its exploitation.

The change only requires a simple majority, which Morena has in both Congresses. The process has already started. The Political Coordination Board (Jucopo) yesterday asked the board of directors of the Chamber of Deputies to convene a plenary session this Monday to approve the change sent from the presidency.

But, as for the electrical matter, the road is still long and there are only three years of government left.

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