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News Article

Reactions to the Energy Bill Implementation

By Lorenzo Núñez | Tue, 03/16/2021 - 09:30

On the 10th of March, López Obrador’s Energy Bill came into force. The Federal Government has begun a 180-day window period where all power generation and energy trading contracts will be reviewed to verify if such contracts are profitable to the government, and if there proven to be the opposite, the contract could be prematurely cancelled. In addition, all contracts that are proven to be fraudulent will be immediately terminated, reported La Jornada.

Different civil organisms, the private sector, academics as well as specialists from the energy sector, pointed out that the power delivery will now be favoring CFE’s plants, over renewable energy plants. They also mentioned that the new Energy Bill will increase electrical power costs, harming companies from multiple industries, reported The Real Estate Market. Coparmex has also stated that the counter-reform prove to be costly for the country and will push potential investment away. Coparmex’s statement is more directed towards Claudia Sheinbaum, Mexico City’s Mayor, arguing that Energy Bill will directly impact the populations wellbeing. This is mainly due to the fact that CFE’s power plants are not only showing their age, but are mainly fueled by hydrocarbons, such as carbon, diesel, gas or fuel which are highly contaminant substances, as reported by REM.

There are also four major inconsistencies in regards to the energy bill. Firstly, it counter acts the 2030 sustainable development act from the United Nations. Secondly, it goes against the T-MEC treaty. Thirdly, it could represent an unconstitutional decision which may still be appealed to the Supreme Court of Justice, and last but not least, it negatively impacts international treaties such as the Paris Agreement, reported Inmobiliare.

On financial side, the Energy Commission of the Business Coordinating Council (CCE) pointed out that the new energy model could end up costing US$2.8 billion to the Mexican population. That being with increments in the amount people will pay for power. Coparmex estimates that in Mexico City alone, the power costs could increasy by 17 percent, which will most likely be subsidized, which will harm the finances of the country and the capital, REM.

This seems to be coinciding with David Berezowsky’s prediction. As reported by MBN, Berezowsky stated that the damages caused by the Energy Bill could be as bad or worse as the damages caused by the cancelation of NAIM in Texcoco. He continued explaining how CFE will not be able to satisfy 100 percent of the demand, and Blackouts like the recent one that affected the northern part of the country could become a regular occurrence.

Adrían Lajous Vargas, former president of Pemex, stated that the concepts of self-sufficiency, especially in gas, is something that will happen far into the future, however, that the idea of a short-term solution is nothing more than fantasy. Mexico buys 60 percent of the gasoline that it consumes, and 70 percent of the gas demand used to power half of the country also comes from outside the country. Gasoline is imported from multiple sources, but gas is almost exclusively sold by the United States due to how difficult it is to store and transport. Lajous also explained how gas comes with other risks, such as the lack of an alternate source. After the massive blackout in February, it showed that Mexico has only two options; buy gas from the United States, or live without gas, he stated in a Forbes article.

The data used in this article was sourced from:  
La Jornada, Inmobiliare, MBN, Forbes,
Photo by:   stevepb
Lorenzo Núñez Lorenzo Núñez Junior Journalist & Industry Analyst