The unprecedented legal battle AMLO’s government will face.

It is well known that the reform that Lopez Obrador intends to pass through Congress goes against the free market and the multi-billion dollar investments that have been made in Mexico. In the face of this, a legal battle will begin as never before seen in Mexico. 

MEXICO CITY (Milenio Diario) – In his column in Milenio Diario, Jesús Rangel writes: Today, the Energy Commission of the Chamber of Deputies expects to approve the ideological initiative of the Electricity Industry Law sent by Andres Manuel Lopez Obrador without major changes. This will signal businessmen to start implementing an unprecedented legal defense scheme in the country and with international repercussions on several fronts. 

Private producers will seek an injunction before the SCJN with the confidence that they will win. They will analyze the investment protection of the USMCA and within the existing bilateral agreements with Spain, Japan, Italy, and other countries that risked capital in Mexico, in addition to resorting to the International Chamber of Commerce, based in Paris, to enforce the agreements that independent energy producers have. 

Many multinationals that will see their production chain affected by higher electricity costs will also seek legal protection. Many of these actions will not go through the Mexican justice system, which complicates the Mexican government’s possible defense. The economic and political cost will be very high with possible repercussions in the exchange rate, higher prices of all types of products with direct damage to the consumer, more inflation, and more sovereign credit risk. 

The most recent estimates indicate that private investors invest 44 billion dollars in the electricity sector. According to several businessmen and lawyers consulted on the subject, the damages to industries that sought more competitiveness are incalculable. 

For Duncan Wood, Vice President of Strategy and New Initiatives at the Wilson Center, private electricity projects have lower costs than CFE plants: “Generation costs in CFE combined cycle plants are 35 percent higher than private plants, and long-term renewable auction projects are 30 percent lower than fuel for combined cycle plants”. The most direct effect of protecting the CFE will be to increase costs for the entire system and, therefore, the need to raise tariffs or subsidies.” 

IEnova, the energy infrastructure firm led by Tania Ortiz Mena, reported that in a challenging environment, it achieved for the first time an annual adjusted UAIDA above one billion dollars and made history by participating in the Federal Government’s National Infrastructure Plan with the development of its new natural gas liquefaction plant in Baja California. 

It is the first plant of its kind on the Pacific coast of North America, developed jointly with its parent company Sempra and Total, with an investment of 2 billion dollars, the largest in Ensenada, and will position Mexico liquefied natural gas market on a global scale. 

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