Mexico Approves Energy Reform to Strengthen PEMEX, CFE

Mexico's government has approved a new energy reform aimed at strengthening PEMEX and CFE. The reform, promoted by MORENA and now led by President Claudia Sheinbaum, seeks to make amendments to the 2014 Energy Reform implemented by Enrique Peña Nieto, giving state companies back their leading role in Mexico’s energy sector.

At the end of his six-year term and before Sheinbaum entered office, former President López Obrador promoted various reforms, including a judicial reform that will lead to popular elections for the judicial power. Now, two weeks into Sheinbaum's administration, an energy reform has been officially approved, which formalizes and further cements the strengthening of CFE and PEMEX.

The reform considers lithium regulation, which will be reserved for State use. In addition, this reform officially turns PEMEX and CFE into “public companies at the service of the State,” instead of productive companies.

“The initiative aims to strengthen state-owned companies, prioritizing public benefit over profit,” Minister of Energy Luz Elena González explained. She highlighted that the 2013 reform had changed PEMEX and CFE to become “productive enterprises” governed by commercial law, which emphasized profitability and allowed private sector participation in areas previously reserved for the state.

Key aspects of the reform include reforming constitutional Art. 25 so companies PEMEX and CFE can revert to being public enterprises governed by public law. Art. 27, states that lithium production will be reserved for the Mexican state, with no concessions granted for its extraction. Finally, Art. 28 establishes lithium and internet services as strategic areas for the state, not considered monopolies.

Private companies will continue to operate within the sector under clear regulations and planning schemes. CFE will maintain a 54% share of electricity generation, while private companies will handle the remaining 46%, ensuring that the needs of the Mexican people and sustainability are prioritized. “Existing contracts with private companies will be respected, but new rules will govern future private participation, aiming to enhance energy sovereignty and reduce dependence on foreign entities,” Sheinbaum emphasized.

During the reform presentation, Sheinbaum noted the significant investments made under former President Andrés Manuel López Obrador’s administration. Between 2019 and 2023, CFE invested nearly US$20 billion in constructing 13 power plants and over 100 transmission projects, generating 55% of Mexico’s clean energy. Sheinbaum assured that CFE will continue to increase its renewable energy sources under an established financing scheme without burdening the public budget.

The reform has now been submitted for voting in the Chamber of Deputies. After this, it will be sent to the Senate and then state legislatures for final approval. Sheinbaum highlighted that this reform fulfills her campaign promises and contrasts with the neoliberal policies of previous administrations. Adjustments will be implemented within 180 days, with González set to meet with the Business Coordinating Council to discuss the reform’s implications.

 “There is no reason for private companies to disagree; if they do, it is for ideological, not technical reasons,” Sheinbaum concluded. She reaffirmed the creation of working groups to outline the participation framework, ensuring that Mexico’s public energy sector is strengthened and that energy sovereignty is maintained.