Initiative to Reverse Energy Reform Presented

The National Regeneration Movement party (MORENA) has presented its initiative to reverse the 2013 Energy Reform, promoted and implemented by the Peña Nieto Administration. By modifying the Constitutional text in articles 25, 27 and 28, the political party will be able to effectively undo the Energy Reform and greatly boost the administration’s goals to return PEMEX and CFE to their position as the state’s strong production companies.

The initiative to change the Constitution was presented last Monday by MORENA Deputy Daniel Gutiérrez, with amendments for three articles: to Article 25, converting publicly owned companies PEMEX and CFE once again into state companies; to Article 27, returning it to its old wording as well, establishing that concessions and contracts regarding the power producing sector are not allowed and that the state has the right to exploit the hydrocarbons in the national territory and to article 28, turning electricity generation and national resources fully over to the state, as opposed to what was stated in the Reform which included nuclear power generation, the planning and control of the national electricity system and the distribution of electricity as areas that will not ‘constitute monopolies’.

Undoing what López Obrador considers the damage of the Energy Reform has long been his administration’s goal. However, experts warn that changing the rules of the reform could have an adverse effect on Mexico’s potential to attract foreign investment to the energy sector. Ruth Guevara, Founding Partner of Zumma Energy Consulting, pointed this out in an interview with MBN. “Countries are competing for investment. If Mexico no longer has the best conditions and clarity in its rule of law, even with its natural resources for renewable energy, it becomes really difficult to invest here,” she said. Nonetheless, it is important to acknowledge that López Obrador has reiterated time and time again that the contracts awarded to private companies through tenders in oil, gas and energy will be respected. Furthermore, judicial decisions were respected by the president and Minister of Energy Rocio Nahle.

As reported by Energía a Debate, Deputy Gutiérrez explained that the economic transformation of Mexico keeps the interests of social sectors and the promotion of development. To achieve this, state control over its essential sectors is necessary. “In this framework, the State must regain exclusivity over essential sectors as part of a comprehensive development strategy based on the exploitation of natural resources for the national benefit, rather than for the benefit of individuals,” he said. Furthermore, the deputy argues that the Energy Reform has not produced the desired results, as it weakened PEMEX and CFE to a point that private investment could not make up for.