Mexico’s Electricity Reform Bill Fails
Mexico's President Andres Manuel Lopez Obrador accused opposition legislators of 'an act of treason' after they voted down his proposed reforms. Photo: Henry Romero/ Reuters
On Monday, Mexico’s House of Deputies rejected an electricity sector reform bill lobbied by President Andrés Manuel López Obrador. The bill would have amended the constitution to give the state-owned Federal Electricity Commission (CFE) more control of the electricity market, from its current 38 percent to 54 percent. This attempt to overhaul the country’s power system was focused on decreasing private sector involvement by transferring authority to the government. However, after a 12-hour session in Congress, the bill failed to gain the necessary two-thirds majority, receiving 275 votes in favor and 223 against.
Supporters of the reform want to reverse the 2013 decision to open the power sector and create a wholesale energy market. Obrador’s left-wing Morena Party has been campaigning to nationalize the energy sector and reverse the liberalization and privatization of past years. They claim that the bill would stop corruption and preferential treatment of certain private firms, and shift supervision over to the state. It could also potentially curb the increase in the price of power by allowing the government to regulate it. Further, the cornerstone of Obrador’s crusade has been tapping into nationalist sentiment by arguing that Mexico has a dangerous dependency on private and foreign companies.
On the other hand, those that oppose the reform—especially the private sector, the United States, and the opposition PAN party—claim that it would be polluting, inefficient, and economically unstrategic. Private companies invest more in renewable energy while state-run companies prefer fossil fuel-based plants, so the bill would have weakened environmental protection and green energy in Mexico, as well as the joint fight against climate change. There are concerns that prices would increase due to the lack of competition and bureaucratic inefficiency, and that there would be more power outages caused by an insufficient supply of energy from older power plants. The reform might also dissuade investors and hurt trade relations with the US and Canada by voiding private contracts in USMCA.
Opposition legislators react after a reform of the electricity sector failed to pass the lower house of Congress, Mexico City, Apr. 17, 2022. Photo: Luis Cortes/ Reuters
The drawn-out, contentious debate has continued since October, when the reform was first announced. Obrador has been championing reform as an important part of his presidency. In response to the vote, he declared in a news conference,“I believe that yesterday was an act of treason against Mexico committed by a group of legislators who, instead of defending the interests of the people… became outright defenders of foreign companies.”
Obrador’s argument revolves around the idea of anti-colonial energy sovereignty. Mexico is known for its very early nationalization of the energy sector in 1938, when the country wrested control from US companies exploiting the industry’s resources. Decades later, the country liberalized and allowed foreign firms back in to invest. This reform is one part of Obrador’s fight to pull economic influence away from the neoliberal, globalized status quo.
Obrador has been publicly framing the debate as one between himself protecting Mexico’s ownership and the opposition defending foreign companies. Although this political strategy has led to a legislative setback in terms of the reform bill, it has put the discussion front-and-center, and given him another major talking point. He has conceded this defeat—for now—and has turned to a bill to nationalize lithium production in Mexico, a lucrative but untapped resource.