Pro-govt Mexican politicians make overtures to energy investors in potential policy shift

Observers of the Mexican energy market have reacted with cautious optimism to comments from figures close to president-elect Claudia Sheinbaum that when the new government takes office in October it will court private investment in the energy sector.

Since taking office in 2018, incumbent President Andres Manuel López Obrádor has rowed back on the liberalization of the energy market and has cancelled renewable energy auctions and bid rounds for oil exploration.

In an interview published in El Sol de México on Thursday, Alfonso Ramírez Cuéllar, a leading figure in the governing Morena party of López Obrádor and Sheinbaum, said that bid rounds, energy auctions and public-private partnerships were all still permitted by the Mexican constitution.

"We are going to come out of this impasse and there will be more investment both in the generation and distribution of electricity and in the production of oil," he said.

"Our constitution and laws indicate limits and establish characteristics for there to be an adequate combination of public investment with the presence of private capital and investment."

Ramírez Cuéllar said private sector participation would strengthen the finances of national oil company Pemex and state-owned electricity firm CFE.

The statements follow comments he made about the energy sector to blog Animal Politico in June, when he called for a financial and operational restructuring of Pemex and said "we have no conflict with private investment."

"What Ramírez Cuéllar suggests implies a policy shift in relation to the approach embraced by the López Obrádor administration, but at the same time, it makes sense given the financial woes of Pemex and Mexico's tight fiscal space in the few years to come," Adrian Duhalt, nonresident scholar at the Baker Institute's Center for the US and Mexico, told BNamericas.

"If Sheinbaum aims to increase production levels of crude oil, natural gas, fuels and green power, her government has at its disposal the needed policy tools, including those that promote a greater involvement of private actors." 

While welcoming the comments from Ramírez Cuéllar, who played a key part in crafting the policies of Sheinbaum's electoral campaign, observers noted that he has no official role in the energy sector in the new Mexican administration. 

"We need to take his words with a pinch of caution," one analyst said. 

Meanwhile, at a meeting of employers' federation Coparmex on Thursday, Sheinbaum's designated economy minister and former foreign minister Marcelo Ebrard said the energy sector was crucial to increasing investment in Mexico.

Ebrard said there needs to be significant investment in renewable energy from both the public sector and the private sector.

Sheinbaum has said she will maintain a core tenet of the electricity policy of López Obrádor, which is to cap the private sector's share of the generation market at 46%.

"This 46% has to have the conditions that facilitate investments," Ebrard said. "That is the focus."