Legal, foreign pressure builds on Mexican energy policy changes

Two months after a spate of regulatory changes to vest Mexico's state energy companies with more power, President Andrés Manuel López Obrador's (AMLO) government is facing increasing scrutiny from both the nation's courts and its closest trade partners. 

“How did they get those contracts?” AMLO said in reference to contracts awarded to private companies for power generation in the wake of Mexico’s 2013-14 energy reform during his daily press briefing on Monday, “Well, through influence-peddling and corruption.”

AMLO said his government “does not want to go to international tribunals, we do not want to be litigious,” adding that “we're reviewing all of this, in order to save Pemex, to save Comisión Federal de Electricidad [CFE], to save the finance ministry [SHCP] in all these cases.”

The remarks hinted at more struggle to come after a welter of regulatory changes were unleashed that seemingly favor state utility CFE and NOC Pemex, while hurting private energy providers operating in Mexico.  

The “sudden change” in Mexico’s energy policy is “a very regrettable signal,” the president of Canada’s Chamber of Commerce in Mexico, Armando Ortega, said on Sunday. 

Ortega said that Mexico’s overall business environment needs “strengthening of the rule of law” as the trilateral USMCA trade deal is set to go into force on July 1. Ortega cited the country’s energy policy as one of the “most worrying” examples. 

While AMLO’s government has recently taken to criticizing Spanish renewables companies in particular, Canadian companies such as Canada Solar and gas giant TC Energy have also been affected by AMLO’s changes in energy policy. 

Moreover, US business groups have also begun crying foul. On June 11, the country’s main oil lobby, API, submitted a letter to senior US government officials saying that, in advance of USMCA, US oil firms were suffering from “acts of discrimination” by Mexico.  

API’s letter criticized Mexico for “new regulatory actions that are inconsistently applied or inconsistent with past practice.”

Domestic legal pressure is also building. In May, renewables companies won a series of legal injunctions halting a move by the country's grid operator Cenace to stop inspections at wind and solar parks. 

On Monday, Mexico’s competition watchdog Cofece said it filed a suit against the energy ministry (Sener) with the nation’s supreme court. 

Cofece released a statement saying that Sener had violated “free competition” in the power market.