© Reuters. A general view shows high voltage power lines owned by Mexico’s state-run electric utility known as the Federal Electricity Commission (CFE), in Santa Catarina, on the outskirts of Monterrey, Mexico February 9, 2021. REUTERS / Daniel Becerril
MEXICO CITY (Reuters) – Mexican lawmakers were set on Sunday to vote on a constitutional overhaul of the electricity sector championed by President Andres Manuel Lopez Obrador, who wants to increase state control of the electricity market at the expense of private operators.
The leftist leader has sought to concentrate more power in the hands of the state and touts the legislation as vital to his plans to “transform” Mexico. The United States, Mexico’s biggest trading partner, has criticized the reforms.
An alliance of opposition parties has also ruled out supporting the legislation, meaning the government looks likely to fall short of the two-thirds majority required for approval.
But Lopez Obrador, seeking to leverage his victory in last weekend’s referendum on his leadership, has vowed to plow ahead and suggested those who oppose his signature legislation are “traitors.”
The president argues that past governments rigged the market in favor of private interests, and said the reform would improve Mexican independence from foreign-owned producers.
Lopez Obrador has pitched the overhaul as needed to keep a lid on energy prices by giving state-owned electricity company Comision Federal de Electricidad (CFE) more control over the power market. CFE plants, whose prices are under government control, would get to sell their electricity before other generators.
The president’s overhaul would move energy regulation from independent bodies to state regulators, rolling back previous constitutional changes.
CFE, meanwhile, would generate 54% of the country’s total electricity and would no longer have to send the cheapest electricity first.
But business groups and several of Mexico’s closest allies have flagged concerns about his energy legislation, arguing it breaks the regional trade deal, the United States-Mexico-Canada Agreement (USMCA).
In a win for Lopez Obrador, Mexico’s Supreme Court earlier this month upheld contentious changes to electricity legislation passed last year after they were blocked by lower courts. The court found a majority of justices voted to strike down key parts of the bill but did not reach a two-thirds majority required to declare them unconstitutional.
However, in an indication of legal disputes that may lie ahead, opposition Senator Emilio Alvarez Icaza this week filed a challenge to that process.
The reform would also nationalize Mexico’s lithium.
If the constitutional overhaul fails, Lopez Obrador said he would send another bill to Congress to secure Mexico’s lithium to ensure that at least part of the bill succeeds.