Image credits: Gob. MX
News Article

AMLO Seeks Constitutional Reform

By Cinthya Alaniz Salazar | Wed, 07/14/2021 - 12:07

Mexican president Andrés Manuel López Obrador (AMLO), insists on seeking constitutional changes to enact his energy reform proposal despite losing qualified majority in congress after June’s midterm elections. On a trip to his native state of Tabasco, he announced he would send a constitutional reform initiative in the field of electricity, citing the interest of civil protection and putting the people before corporate interests.

This follows after the Supreme Court shot down his Electricity Industry Law (LIE) proposal in March; and more importantly, after the Federal Economic Competition Commission (COFECE) reported evidence of possible monopolistic practices in the LP gas sector. The president  reacted swiftly to COFECEs findings, as accounted by the creation of a new state enterprise, Bienestar, only months after the fact. In hindsight this may have prompted the president to take secondary measures to dissuade similar behavior from other energy sector industries.

If AMLO had anti-neoliberal leanings, this has apparently fomented a sense of urgency to refocus the economy giving preference to national enterprises.

“That is why neoliberal politics should never return, never again, and that is why we are going to present a constitutional reform initiative. I thought about reforming the law to correct that situation, but I came to the conclusion, after that protection, that we need constitutional reform so that it is considered a priority.”

He finished this sentiment by sharing that his government had issued a decree to never return to neoliberal practices.

The revised LIE reform has evolved with significant changes to the original fundamentals. The most important being economic dispatch, a tool used to guarantee the lowest cost to produce energy, will now be replaced by a “administrative” dispatch. Although one is not specified by name, it does prioritize the dispatch from the Federal Electricity Commission (CFE). With the proposed reform the resulting dispatch would be as follows:

CFEs hydropower generators

Independent Power Producers (offtake agreements with CFE)

The rest of CFE-owned generators

Private renewable generators

The rest of Private generation

However, in spite of these sentiments and amendment to the original reform bill, it is unlikely AMLO will be able to convince the necessary congressional members needed for a constitutional amendment. Regrettably, this signals the continuation of animosity towards private industry for the remainder of AMLOs administration of which will continue to stagnate infrastructure development where investment is needed most.

Photo by:   Gob. MX
Cinthya Alaniz Salazar Cinthya Alaniz Salazar Journalist & Industry Analyst