Public Affairs Chatter
Mexico’s Energy Reform: Shifting Control Back to State Enterprises
A key aspect of the (counter) energy reform passed by the Chamber of Deputies is the return of PEMEX and CFE to public enterprises rather than keeping them as productive entities. This shift represents a reversal from the 2013 (neoliberal) energy reform, which aimed to establish a level playing field between the state-owned companies and new entrants, in theory to attract investment, foster competition and efficiency. The dominance and social purpose of the state-owned enterprise is now enshrined in the law, and private sector companies will have to adapt and accept this, for good or bad. At least there is clarity, and no one can argue that the new government does not have a strong political mandate to carry out these changes.
While it’s laudable to aim for affordable energy for all citizens, such an approach without a sustainable financial model is of course costly, in a time where the budget deficit is already too high. Financial analysts worry Mexico risks creating a financially unsustainable energy sector by focusing on reducing prices to the end-customer, without providing the profits needed for reinvestment and modernization. The worry is that by prioritizing affordability over profitability, there could be underfunded infrastructure and declining service quality, in the context of an urgent need to keep up with the growing energy demands of the population. After all, this is what happened when Telmex was in government hands back in the 1980s.
The prohibition of concessions on lithium is another concern. While the government’s desire to control lithium — a critical component in renewable energy technologies — is rooted in protecting national resources, this decision could deter international investments necessary to exploit this resource fully. Mexico currently lacks the expertise and capital to develop its lithium industry independently, and without foreign participation, the country risks falling behind in the global race for renewable energy.
From Morena´s point of view, evidently backed by a large majority of Mexicans, the current legislation from the 2013 energy reform has not significantly benefited Mexicans. Additionally, both Pemex and the CFE are loss-making anyway, in CFE’s case exacerbated by reduced energy dispatches and from purchasing electricity from private firms.
The Mexican Energy Council (Comener), representing various business voices in the sector, is actively involved in shaping the reform. It views the regulation of the 54%-46% energy distribution model as a positive step toward establishing the legal certainty needed to attract the ‘urgent’ investments required in the industry. While this regulation marks a new boundary, Comener’s president, Juan Acra, believes it provides initial confidence but stresses the need for further clarity in business models, such as public-private partnerships, to secure investment and legal certainty fully. Despite reversing some aspects of the 2013 energy reform, Comener remains optimistic, especially following President Claudia Sheinbaum’s commitment to the energy transition and clear investment rules. The council, including key partners like the CCE and the National Solar Energy Association, is already seeking dialogue with legislators to shape the secondary laws for the reform.
Senate Implements Lottery to Restructure Judiciary, Raising Questions on Judicial Stability
In a highly controversial session, the Mexican Senate, without the participation of the PAN and Movimiento Ciudadano parties but under the watchful eye of a notary, conducted a lottery to assign 850 judicial positions that will be subject to direct elections in 2025. Of these, 139 are currently vacant, but more disturbingly, the draw effectively removed 711 sitting judges and magistrates, raising serious concerns about the independence and stability of Mexico’s judiciary.
The session, lasting over six hours, barely had the necessary quorum, with 66 senators present—just one above the minimum. Interestingly, 11 PRI members sided with Morena, PT, and PVEM, allowing the process to move forward. Presiding Senate President, Gerardo Fernández Noroña, explained the process, dismissing opposition concerns as he shifted the lottery mechanism to what is constitutionally prescribed—ignoring earlier agreements.
Government and Private Sector Dialogue Focuses on Strengthening Mexico’s Investment Climate
Marcelo Ebrard recently met with the Consejo Coordinador Empresarial (CCE) to discuss critical issues related to investment, economic growth, and competitiveness in Mexico. During the meeting, Ebrard emphasized the importance of fostering public-private collaboration to drive economic development. A key outcome of the discussion was the creation of various working groups to strengthen the relationship between the private sector and the government, aiming to address current challenges and promote long-term investment.
Additionally, Ebrard highlighted the need to upgrade the USMCA (T-MEC) by focusing on increasing regional production chains, improving the value-added of Mexican exports, and enhancing incentives for strategic sectors. These efforts are part of a broader initiative to relocate investments and attract more businesses to Mexico, a key objective of the government to boost economic growth.
The CEO Dialogue and Council for Business Relocation, recently announced by Marcelo Ebrard, aims to capitalize on the current trend of nearshoring, where global companies are relocating supply chains closer to key markets, like the U.S., to mitigate risks and costs. Additionally, the Relocation Council will strategize on how to distribute new investments equitably across regions, fostering regional development and reducing dependency on traditional industrial hubs. This initiative could result in sustained economic growth, job creation, and a stronger position for Mexico in global supply chains. However, its success will depend heavily on the government’s ability to implement practical infrastructure improvements and maintain investor confidence.
Harfuch’s Crime Prevention Strategy Draws Parallels to García Luna’s Model
Omar García Harfuch’s recently unveiled security strategy has sparked considerable debate, especially given the striking similarities between his proposals and the strategy outlined in Genaro García Luna’s book, Seguridad con Bienestar. García Harfuch’s plan, promoted as a fresh approach to combat crime in Mexico, notably mirrors key elements from García Luna’s earlier frameworks despite significant differences in political contexts. Both focus on using intelligence and technological resources to prevent crime, aiming to dismantle criminal networks through targeted data analysis and surveillance efforts.
Contact:
Laura Camacho
Executive Director Miranda Public Affairs
laura.camacho@miranda-partners.com
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