Energy Reform Vote Postponed Again

Congress postponed the vote on President López Obrador’s energy reform to June 2022 due to a lack of agreements between conflicting political forces. President of the Political Coordination Board (JUCOPO) and PRI Parliamentary Leader, Rubén Moreira, revealed the decision to the public last week.

After failing to reach a consensus, deputies of the Constitutional and Energy Commissions requested an extension to rule on President Andrés Manuel López Obrador's constitutional energy reform, Moreira said. "So far, no political route has been built by MORENA.” Without consensus, there can be no ruling on their part, which is an indispensable component for the reform to reach a vote in the full Congress. "Without agreements, there can be no ruling. And without a ruling, there will be no vote in Parliament," declared Moreira. Furthermore, he stressed that MORENA is the main responsible party seeking consensus and compromise, since the party is promoting the initiative.

The initial deadline for ruling on the reform initiative was on March 28. Congress authorized an extension of 90 days to the Energy and Constitutional commissions, allowing them to rule on the project by June 28 at the latest.

When the Open Parliament finished, El País reported that communication between MORENA and its biggest opposition parties, PAN and PRI, had increased significantly, as the federal government knows that it needs the opposition to approve the constitutional reform. A path toward negotiation aiming to adapt the reform in certain key areas materialized. However, Moreira's recent statements rule out any progress.

Opposition parties had already mentioned the possibility of postponing the vote on the reform until June, after electoral processes of 2022 were finalized. The postponed vote will increase the difficulties currently faced by the Mexican energy sector. Analysts and businessmen agree that the uncertainty generated by the reform has slowed down the sector, as the lack of clarity in the regulatory framework is holding back investment. “The worst-case scenario for the energy sector is to remain in regulatory uncertainty, as there is no progress nor new investment,” said Alfredo Álvarez, Partner and Energy Segment Leader, EY, during Mexico Energy Forum 2022.

“Whatever the result, the reform proposal has already generated a negative effect for Mexico, as a strong message was sent to the private sector with a long-term impact on Mexico’s image as an investment destination,” added Benjamín Torres-Barrón, Principal, Baker McKenzie.