Andrés Manuel López Obrador (AMLO) seeks to destroy the electricity market in Mexico. To know about what is going on, El American had an interview with Gonzalo Monroy, an expert consultant in energy matters and one of the most well-known and respected Mexican voices in the sector.
We talked to him about the implications for Mexico since López Obrador presented a constitutional reform initiative to give the Federal Electricity Commission (CFE) – a state-owned company – complete control of the electricity market and to turn lithium exploitation into a monopoly similar to that of oil.
Gonzalo Monroy: AMLO’s reform means a 60-year setback
He points out that the President’s proposal would not only reverse the achievements within the electricity industry as a result of the reform approved during the administration of Enrique Peña Nieto, but would also reverse previous advances, returning the country to a scheme of absolute control by the Federal Electricity Commission, similar to that of the 1960s.
It also describes the enormous damage that AMLO’s reform could cause, both ecologically and economically, as CFE plants use older – and more polluting – technology to generate electricity.
Monroy states that AMLO’s reform “violates the accord and also the spirit of the North American Free Trade Agreement and also that of the European Union,” for which Mexico could face costly international proceedings and sanctions.
The damage would not only be reflected in finances, but also in the health sector, since many CFE plants operate with high sulfur fuel oil, which causes cardiorespiratory diseases, “given that there is a large emission of sulfur dioxide” as the CFE itself recognized since the 90s.
On the economic aspect, the reform would prevent Mexican companies from being able to guarantee the use of clean energy in their processes, as CFE would mix all types of energy sources. This would make it increasingly difficult and costly to access credits and investments, which globally establish increasingly strict criteria regarding the carbon footprint associated with the companies they work with
The heart of the reform is to reduce competition to its minimum expression
Monroy explains that, if the Mexican president’s proposal is approved, the government company would cease to be an actor in the electricity market and would become “literally the State itself”, with power even greater than that of the federal government’s ministries.
This is no coincidence, since “the idea is to reduce competition practically to its minimum expression. That’s what it’s all about, it’s the heart of it all”.
Finally, as to the chances of AMLO’s proposal becoming a reality, Monroy points out that the president does not have enough votes and would need the support of dozens of opposition legislators, who would not give away their votes and although the government could buy some wills, the fact is that Mexico does not have “enough embassies to start handing out prizes” to the deputies.
We will see if the President of Mexico has enough political capital to destroy the electricity industry or if the institutions can resist a little longer