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News Article

Mexico’s Supreme Court Suspends SENER Policy

By Cas Biekmann | Tue, 06/30/2020 - 14:16

On June 22, antitrust regulator COFECE announced it had filed a suit in Mexico’s Supreme Court of Justice, directed against a policy published by SENER on May 15. Now, Mexico’s top court has upheld the complaint, meaning that the policy has been suspended until the court issues a definitive ruling, reported Reuters.

SENER’s policy, which is based on the pandemic’s effects on the national energy system, aimed to restrict access of private renewable energy to the market and strengthen state production company CFE, a move considered by many to widen the rift between public and private energy sectors. COFECE had already stated that it deemed the policy to be a violation of principles regarding free competition in the energy sector and subsequently announced it would challenge it in court. Minister of Energy Rocío Nahle and President López Obrador argued that the private sector would not receive any benefits where the reliability of the national energy system was concerned. The state has been seeking to expand CFE’s role, which López Obrador and Nahle argue has been unfairly diminished in past administrations. Despite this, they also showed clear signs of willingness to accept judicial ruling on the matter. While Nahle did not mention the ruling directly in a tweet, she stressed that she respects judicial decisions but that the government nonetheless has an “obligation” to ensure energy security. In an interview for the TV program Fórmula Financiera, Nahle said the government will abide by the Supreme Court’s decision. “At the end of the day, the court will decide,” said Nahle.  

With the suspension in place, private energy operations in Mexico can now continue their work as if the policy had never been issued. For the dozens of private renewable projects affected by the measure, this is undoubtedly good news. The suspension will continue until the final decision is made but the court has not given a date for this to happen. Legal certainty was one of the main discussion topics of concern highlighted in Mexico Energy Law Summit’s webinar last week.

COFECE’s role in the matter is particularly poignant considering the President’s criticism of the regulator, as he deems it to be costing too much money for taxpayers. Earlier in June, López Obrador supported a measure that would merge three regulators into one, which would effectively disband COFECE. Reuters quoted critics who said the president is attempting to loosen chains on his authority.

The data used in this article was sourced from:  
Reuters, Mexico Business News
Cas Biekmann Cas Biekmann Journalist and Industry Analyst