Home Feature Risk of nationalizing all the electrical industry in Mexico

Risk of nationalizing all the electrical industry in Mexico

by Yucatan Times
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Legal uncertainty hits international private initiative, says the Mexican wind energy associations. National and foreign investors in the electricity sector in Mexico warn of possible risks of a return to nationalization.

MEXICO CITY (El Universal) – Julio Valle, the spokesman for the Mexican wind energy associations AMDEE and Asolmex, said the main risk they are evaluating is the legal uncertainty. The signal sent by the Mexican government with the measures adopted is that “they want to do everything without help from anyone. It seems our sector and the discussions are being taken to the ideological arena”.

Valle considered challenging to change the government’s mind.” Although we do not agree on how it is doing, it is clear what it wants to do by putting the legal framework at risk. In that sense, there are immense risks in the energy sector.

“It seems there are several governments: One with the Secretariat of Energy, which marks a possible path to nationalization. Then, another where the Secretariats of Economic, Finance, Foreign Affairs, Semarnat, and Cofece seems to point in the opposite direction to what the authorities of the energy sector are marking for them… Who do we believe?”.

Valle said, there is consensus on what the investors have to do, and solutions are being discussed with the government.

The Mexican Bar Association of Attorneys found unacceptable how the National Energy Control Center (Cenace) and the Ministry of Energy (Sener) exceeded their endowments. The Mexican Bar of Attorneys expressed its concern about the “breakdown of the national legal order”, through agreements and policies that regulate or legislate in open violation of the Constitution. Therefore asked the Executive Branch to review and rescind these “regressive and irregular” measures.

The Mexican Bar Association of Attorneys claimed the National Energy Control Center Agreement and the energy policy published by the Ministry of Energy in the Official Journal of the Federation violates the law. “The publication was issued in violation of the Constitution, as well as the regulations of the Electricity Industry, General of Regulatory Improvement, Energy Transition, Climate Change, Economic Competition, Federal Public Administration, Cofemer and the recommendations of the Mexican industry, the European Union and Canada, in their capacity as trade partners.

“These agreements -The Mexican Bar added -eliminate incentives in clean energy and the creation of jobs derived from these investments. It modifies the country’s energy generation regime. It creates an environment of unbalanced competition in favor of the CFE, which is given an authoritarian character”.

The Bar spokesman explained that they also lead to a breach of contract and will cause the financial institutions that supported the projects to review the viability, and perhaps give up on its financing. Such a situation will bring multiple national and international claims, which will involve the payment of millions of dollars in compensation from the Mexican government.

“Amparo” -injunction- proceedings
According to the First Specialized Competition Court, there are 14 amparo proceedings, two by Mexsolar and two by Dolores Wind. The rest is confidential.

Valle said the “Agreement to Ensure the Efficiency, Quality, Reliability, Continuity, and Safety of the National Electricity System” impacts 44 clean energy generation projects in 18 states.


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1 comment

Alfonso May 20, 2020 - 9:42 am

Surely, it doesn’t seem wise to privatize sectors like energy, water and housing. Wonder if air is next on the privatisation list. Seems absurd that this article seems to imply that Mexico shouldn’t control its own energy!


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