To improve electricity generation in Mexico, a constitutional reform is not necessary. Or at least that is what José Abugaber, president of the Confederation of Industrial Chambers (Concamin), thinks. “There is no need to make a constitutional reform to adjust the areas of opportunity that we see in the 2013 reform.”
The Constitutional Reform of the Electricity Sector, promoted by President Andrés Manuel López Obrador, seeks to reform articles 25, 27 and 28 of the Constitution with the aim of limiting the participation of private initiative in the generation of electricity. This, according to Abugaber, will generate because it will privilege electricity generation from fossil fuels, which is more expensive than that generated by renewable sources.
“We are not looking for a confrontation, or the disappearance of the CFE (…) The only thing we want is to work hand in hand with the government for the common good without having to reach a constitutional reform,” the leader of the dome says in an interview. industry in Mexico.
The leader of Concamin, whose members represent 60% of the country’s electricity consumption, warns that forcing companies to buy energy from CFE at higher prices will inevitably generate inflationary pressures.
“The rise will not be immediate, it would be gradual and would depend on each sector… Certain industries have taken stock, the mining company, for example, calculates that with this reform proposal its electricity costs could increase by 20%, the cement producers also give a figure similar,” details Abugaber.
$44 billion at risk
For the leader of the Concamin, a more expensive energy will be synonymous with loss of competitiveness and a brake on private investment. “We have learned that companies that were considering investing in Mexico have paused their projects due to uncertainty in energy matters,” says Abugaber, without specifying which companies or the amounts that have been stopped.
In addition, according to an analysis by Concamin, the Constitutional reform of the Electricity Sector violates at least two chapters of the T-MEC: 14 referring to Investment and 21 that speaks of Competition Policy.
It also contravenes the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TIPAT), the Trans-Pacific Partnership Agreement (TPP), the Agreements for the Promotion and Reciprocal Protection of Investments (APPRIs), all the investment protection clauses of trade agreements signed by Mexico , and the Paris Agreement, in which Mexico committed to reducing its greenhouse gas emissions.
Failure to comply with the agreements sends “a negative signal to attract and retain capital,” says an analysis carried out by the agency.
The Concamin calculates that there are 44,000 million dollars invested in installed private generation capacity and warns that “the reform would have confiscatory effects on operating and committed investments in the generation, supply and marketing markets.”
The agency anticipates that the change in the rules within the electricity market will trigger a wave of controversies due to non-compliance with international agreements. “Investors would be forced to go directly to international arbitrations. In the case of the T-MEC, the panel’s decision is mandatory and could bring commercial retaliation for an amount equivalent to the value lost by the plaintiffs,” says the agency.
“We see it very difficult for it to happen”
The process to vote on AMLO’s electricity reform has begun in the Chamber of Deputies. The opinion was approved yesterday in general in commissions. Morena hopes to vote on the initiative before the end of this legislature, on April 30; but the opposition parties presented their own initiative and have closed ranks to vote against the document.
“We see it as very difficult for (AMLO’s reform) to pass because 57 opposition votes are required. We see very unlikely that it will be achieved, ”says Abugaber. “That is why we say: we are going to sit down and find a point of balance so that we can reach an agreement without having to make a constitutional reform,” he concludes.
