MEXICAN ENERGY SECTOR

Mexico will respond to Canada and the EU for their criticism of the new rules in the energy sector

Mexico's Energy Secretary Rocio Nahle said Monday that this week she will respond to letters sent by the European Union and Canada questioning the new rules of the electricity sector, which the official defended as a way to ensure the reliability of the system.

Last week, the Energy Secretariat issued new guidelines on the electricity industry, citing the need to ensure the reliability of supply during the coronavirus pandemic.

The president has promised Mexico's energy self-sufficiency and argues that some contracts signed by previous governments are abusive and against the interests of Mexicans.

Over the weekend, Canada and the European Union sent letters to Energy Secretary Rocio Nahle, raising concerns about regulations that they say threaten foreign investment in the sector, an unusual diplomatic intervention by some of Mexico's closest allies.

"I received the letters from the European Union and Canada, I will respond to them this week," the official said in a radio interview. "It's not about good and bad, it's not about private and public, it's about having an order".

In addition to the health and economic crisis that Mexico is experiencing in the midst of the coronavirus pandemic, it is also undergoing an energy confrontation after the current government, led by Andrés Manuel López Obrador (AMLO), announced through the National Energy Control Center (Cenace) of the Ministry of Energy, that critical tests for new renewable energy projects would be suspended indefinitely.

Faced with this, the Business Coordinating Council (CCE), the business representation body CONCAMIN, the American Chamber of Mexico, among others, began to denounce that this unfairly benefited the Federal Electricity Commission (CFE) by curbing competition.

Now, the Wall Street Journal (WSJ), a recognized U.S. media, highlighted in one of its articles that the government of Lopez Obrador is taking strict control of the electricity market affecting projects with a value of close to $6 billion dollars invested, at a time when Mexico is facing an economic recession due to the pandemic.

The media said that, in effect, the new rules give the CFE an advantage over private developers who have been investing in the country, delaying the opening of the sector's market to foreign investors.

This halt in projects occurred at a time when the drop in demand caused by the coronavirus generated an increased need for renewable energy. Canada's ambassador-designate to Mexico, Graeme C. Clark, said in a letter to Rocio Nahle, Mexico's Secretary of Energy, that these regulations "jeopardize the operation and continuity of renewable energy projects of Canadian companies in Mexico.

"If we don't put an order in place, they will continue to see Mexico as a land of conquest": López Obrador

The president of Mexico, Andres Manuel Lopez Obrador, said Monday that the businessmen are "in all their right" to go to court to settle a dispute over new rules to the electricity sector.

"I am surprised that some, not all of them of course, Mexican businessmen defend this system, this regime of corruption, if it is in the interest of all of us that there be honesty... If we don't bring order, they will continue to see Mexico as a land of conquest," said the Mexican president.

Last week, the Ministry of Energy reinforced the State's control over the electricity industry, citing the need to ensure the reliability of the electricity supply during the coronavirus pandemic.

And major business groups condemned the new rules over the weekend, arguing that they will hit investor confidence and slow the growth of renewable energy, as tensions between the private sector and government rise.

The dispute is another blow to the relationship between the entrepreneurs and the president, who has alarmed investors with his insistence on seeking greater state control of the energy sector, often by trying to modify existing commitments.

"We are going to defend the Mexican electricity industry, we are not going to increase the price of light," López Obrador said.