The new President of Mexico, Andres Manuel López Obrador, stated his intention of reinstating Mexico’s energy companies to their market positions two years ago after his election. His stringent measures and policies are driving away renewable energy investors and creating a skirmish in the country.
López Obrador’s presidential speech on his election articulated his ambition of redirecting the energy industry. This move would imply reinstating the parastatals like Pemex and CFE to their initial position of dictating the energy sector’s direction. Currently, these two state-owned firms are underperforming and are considered as outdated energy firms.
Claudia Espinosa, the editor of the Mexico Energy Report, stated then that this move would interfere with the legislation surrounding the energy sector and demean the whole process. Espinosa’s prophesy is happening right now with the energy industry stakeholders brushing shoulders with the president and resulting in political unrest.
The first move by the president to fulfill his ambition was to cancel the validity of all the offshore wind energy licenses until the end of the coming two years. This move steered Pemex to regain its command of the energy sector. He then bruised the renewable energy investors by demanding a renegotiation of the contracts they had acquired in the previous regime. This strategy aggravated the foreign investors in the renewables, forcing these investors’ parent countries to send their ambassadors to discuss the way forward with the Mexican legislators.
The government went ahead to dismiss the clean energy contracts that had been agreed on by the former president of Mexico. Additionally, through its Mexican Energy Ministry, the government amended the Clean Energy authorization frameworks in favor of CFE. The previous regime had issued licenses to authorize incentives and support for renewable energy projects. Labrador’s government decided to give similar rights to CFE for renewable energy projects, demeaning these projects’ value.
The directives above by the Mexican government worsened the income levels for probable renewable energy projects making the parastatals the primary beneficiaries of these projects. Foreign companies battled out these outrageous moves by the president, winning the cases last year when the energy sector is under paralysis.
The chief executive of CFE, Manuel Bartlett, publicly announced earlier this year that the firm intends to revisit the renewable energy contracts they had dropped after the judicial intervention. He proudly explained that they have a right to review the cases since the government has allowed them. The pandemic worsened the country’s energy situation paralyzing any efforts by the renewable energy investors to salvage the sinking boat.
To conclude, Mexico should rethink its stand on foreign renewable energy investments if it wants to transition to clean energy swiftly. If the country fails to resolve this problem, it will be considered outcasts to overcome climate change.