Buenrostro Highlights Key Points to Address in USMCA Dispute
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Buenrostro Highlights Key Points to Address in USMCA Dispute

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Perla Velasco By Perla Velasco | Journalist and Industry Analyst - Tue, 01/31/2023 - 08:54

Minister of Economy Raquel Buenrostro announced that the government is preparing a policy package to address the issues contained in the US-Canada-Mexico Agreement (USMCA) dispute regarding Mexico’s push for more state control in the energy sector. According to Buenrostro, the key to avoiding a USMCA dispute panel, which experts say Mexico would likely lose, is more investment in transmission infrastructure, administrative efficiency and guaranteed interconnection.

Buenrostro told El Economista that as part of Mexico’s compromises to settle the dispute, the government will invest in transmission infrastructure to support the interconnection of renewable energy projects, as well as speed up permit processes.

Mexico’s team in charge of the negotiations regarding the US and Canada’s USMCA complaints consists of Rocío Nahle, Minister of Energy, Manuel Bartlett Díazz, Director, CFE and representatives of CRE and grid operator CENACE.

One of the main issues is the alleged unfair competition between private power producers and CFE, as denounced by the US and Canada. The 2021 reform to the Electricity Industry Law (LIE) gave state-owned power utility CFE an edge over other private players.

According to Buenrostro, the LIE’s modifications have been nullified as they were put on hold due to a series of amparos. “We have been studying why this perception that CFE is being given preference over foreign investment persists since the LIE is in an appeals process. The truth is that the law applied in Mexico right now is that of [the 2014 Energy Reform]. So, the question is why do they feel that priority is being given to CFE?” said Buenrostro.

The ministry further defended the decisions regarding renewable energy interconnection citing problems with the transmission and distribution system. Therefore, more investment will be made as a solution. “We believe it is a technical issue that requires investment and the strengthening of the CFE’s equipment to improve the quality of power when renewable energy is interconnected to the national transmission and distribution network,” she said. Buenrostro added that Canada is sympathetic to these issues.

She also said the government has been trying to tackle the permitting issue for a few months now since CRE released a plethora of pending permits. Moreover, Buenrostro stated that Mexico’s decision to have an electricity market with a 54% participation of the state-owned company stood firm. She admitted that speeding up permit processing was necessary to let private players gain clarity about whether their investment would play a significant part in the 46% allocated to the private sector.

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