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AMLO's clash with Business hit Mexico's green energy sector

Alejandro Cegarra/Bloomberg

Andres Manuel Lopez Obrador (AMLO)

- The president says he'll defend the nation's power industry
- Business groups, Canada, E.U. want AMLO to revoke new rule

By Amy Stillman/Bloomberg

MEXICO CITY
Petroleumworld 05 19 2020

Mexico's power market is the latest battleground in a worsening clash between the country's business elite and President Andres Manuel Lopez Obrador, after the government fast-tracked new rules that put billions of dollars in clean energy investment at risk.

Lopez Obrador said he'll defend the national power industry after the country's top business lobby group, known as the CCE, called on the government to revoke the measures and threatened legal action.

Mexico Court Allows Some Halted Clean Energy Tests to Resume

Lopez Obrador's relationship with the country's business elite is already nearing a breaking point after he refused to implement a robust stimulus plan to mitigate a looming economic crisis due to the coronavirus shutdown. He's been angering private enterprise since he was elected in 2018, by canceling a $13 billion airport project already underway, and more recently by backing a local referendum to shutter a partly built beer plant.

The president had some harsh words for the private power sector at his morning press conference on Monday:

Companies “have all the right to go to court, just as we have the right to do so within the current legal framework, and in defense of the interests of Mexican citizens,” he said. “If we don't put things in order, they will continue as before, with corruption, and Mexico will continue to be seen as the land of conquest, as was done before, where international companies came and sacked” the country.

Business leaders have criticized the government for using the coronavirus pandemic as an excuse to pass the new rules that they argue will hamper competition. In a letter published over the weekend, the CCE called it a “flagrant violation of the Mexican constitutional and legal framework.”

The new measures published on Friday impose a number of limitations and tests on new clean energy projects and give the National Center for Energy Control, known as Cenace, the power to reject new plant study requests and prioritize the state utility CFE. Without the tests, new plants would not be able to come online.

The agreement was published without respecting legal and regulatory processes and puts electricity investments of more than $30 billion in 18 states at risk, the CCE added. “This represents a frontal attack on the legal certainty of investments in Mexico, causing serious consequences for the country, such as the loss of jobs, investor confidence, and damages for electricity projects of all technologies.”

The National Commission for Regulatory Improvement, known as Conamer, had attempted to stall the process last week, requesting further regulatory impact studies. Conamer said that it would cost companies to comply with the new rules. The chief of that organization Cesar Hernandez resigned on Friday, the same day the measures were passed.

The European Union and Canada both sent letters to the government criticizing the new rules and the American Chamber of Commerce of Mexico published a statement saying that the fast-tracked process hurt rule of law in the country.


Story by Amy Stillman from Bloomberg.

bloomberg.com
05 18 2020

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