Split in Mexico opposition opens door
for AMLO's Energy Reform bill passage
- The bill would undo electricity opening to private companies
- PRI party may offer up enough votes for the proposal to pass
By Nacha Cattan and Maya Averbuch / Bloomberg
Petroleumworld 10 08 2021
Mexico’s opposition parties are at odds over how to deal with the government’s deeply nationalistic bill to return control of the electricity sector to the state, opening an opportunity for the controversial legislation to pass.
Fault lines appeared within the opposition bloc soon after President Andres Manuel Lopez Obrador presented the bill last week, triggering a clash over whether to debate the proposal, as some lawmakers have chosen to do, or reject it outright, as others have done.
AMLO, as the president is known, needs 53 votes from opposition legislators in the lower house and at least 10 in the senate to pass the bill’s constitutional amendments, according to analysts at Eurasia Group, who see only a 30% chance of approval for the proposal in its current form.
The legislation seeks to cancel private electricity generation contracts, hurting private investments and returning Mexico to the 1960s, when public utilities won total control of the market. AMLO has so far tried both courting and pressuring the PRI, Mexico’s traditional party that ruled the country for most of the 20th century, to fall in line.
PRI lawmakers may offer up enough votes for the initiative to prosper, according to one official from the party who asked not to be named discussing sensitive topics, while another told Bloomberg News the bill may pass in the lower house, but would have a harder time in the senate.
Yet allowing the legislation to be approved would hurt the party’s standing with a coalition of other opposition groups seeking to challenge the government in the 2024 presidential election. Mexico’s right-wing National Action Party, or PAN, warned that its alliance with the PRI, which helped both gain seats in the midterm elections in June, would remain intact only if the PRI votes against the legislation.
For some opposition lawmakers, however, it may prove enticing to cozy up to a popular president by supporting his bill.
Changes are likely to occur for the bill to gain the two-thirds majority needed in both houses. Apart from calling for an end to all private electricity generation contracts to ensure the state-owned Comision Federal de Electricidad keeps 54% of the market, the proposal seeks to have the independent energy regulators be absorbed into government agencies.
Moody’s Investors Service said the initiative would deter private investment, discourage renewable power and likely increase the cost of electricity.
Jerico Abramo Masso, a PRI lower house lawmaker, told Bloomberg News he generally agrees with reforming the energy sector to strengthen government institutions and lower consumers’ electricity costs. Yet he would seek several changes to the bill, including striking the contract cancellation and keeping regulators independent.
“We’re not saying that this should be thrown out. To the contrary, we’re saying that we have to analyze it in order to be able to debate it and make proposals,” he said.
A senior PRI senator, Claudia Ruiz Massieu, said she was against the bill, while Ruben Moreira, who leads the party in the lower house, said his lawmakers can vote based on their own conviction. PRI President Alejandro Moreno insisted the bill remain up for debate.
Adding to the dispute, several of the PRI senators were cabinet ministers in the previous administration, which pushed through the very 2013 reform that opened the electricity sector to private generation that AMLO is now trying to undo.
“The PRI is a party without ideology, so it can vote in whatever direction opportunity strikes,” said Javier Oliva, a political scientist at Mexico’s National Autonomous University, who was previously a ranking member of the group. “I do see the possibility it passes, but the real fight will be in the senate.”