Sheinbaum to Define Extent of Private Participation in the Sector

President-elect Claudia Sheinbaum shared with the Mexican Association of Hydrocarbon Companies (AMEXHI) her stance on public-private partnerships (PPPs), saying that they will not be part of her energy policy. Nonetheless,  she mentioned that her administration will be open to private investment in the oil and gas sector, although denying a return to Enrique Peña Nieto's energy model, which, in her view, “favored private companies at the expense of the State.”

AMEXHI considers that relaunching bidding rounds and opening to private participation could generate budgetary benefits of nearly US$160 billion. Alberto de la Fuente, President, AMEXHI, emphasizes that ensuring a reliable electricity supply is paramount to maintain competitiveness in the Mexican industry and capitalize on the opportunities offered by nearshoring.

Although Sheinbaum dismissed the PPPs model, she assured that she will explore other mechanisms of collaboration with the private sector. Private sector involvement has become a significant point of discussion for the upcoming administration due to uncertainty created by López Obrador's policies and reforms. Potential reforms in the judicial sector have also intensified speculation about the future of various industries, including the energy sector. "Since their inception, independent regulators have made decisions based on technical criteria. If the government assumes these responsibilities and becomes directly involved in the sector through its state-owned companies, impartiality could be compromised," an energy executive told S&P.

State-favoring policies could also jeopardize USMCA negotiations and hinder economic competition in Mexico. Mariana Campos, Director General, México Evalúa, warns that legal uncertainty could directly conflict with USMCA’s Chapter 32, in which the signatory parties commit to refrain from signing free trade agreements with non-market economies. If Mexico’s institutional degradation reaches the point where it could be classified as a non-market or emerging non-market economy, its partners could have grounds to withdraw from the treaty and impose tariffs under World Trade Organization (WTO) rules. 

Although Sheinbaum has not yet provided specific details on how the private sector will be involved, Marcelo Ebrard, the incoming Minister of Economy under Sheinbaum's administration, has outlined plans to encourage private investment in order to boost renewable energy production in Mexico.