Contents

Introduction

Mexico's president-elect Andrés Manuel López Obrador has given out mixed signals regarding plans for the future of the country's electricity sector, limiting his proposals to a championing of hydroelectricity and community-focused renewable energy projects, while his pick for the head of state utility CFE has provoked surprise.

While expressing hostility during his electoral campaign to the 2013 energy reform, which ushered in auctions for electricity generation projects as well as allowing for foreign investment into the upstream oil and gas sector for the first time since 1938, López Obrador (known by his acronym AMLO) has since moderated his stance, although his plans for the electric power sector remain vague.

Shortly after his landslide election in July, López Obrador (pictured, below) announced plans to move the headquarters of the energy ministry from Mexico City to the oil-producing state of Tabasco, and to move Pemex's central offices to Ciudad del Carmen in neighboring Campeche state, as part of his decentralization plans.
 



And on August 18, López Obrador made one of his first direct pronouncements regarding renewable energy, highlighting its importance for the future of the country and the planet as a whole, while pledging to invest in science, technology and innovation to promote the development of such power sources.

He described investment in technology and innovation as "the education of the future."

But three months before he takes office, very few concrete and specific plans have been announced regarding how he envisages the development of the electric power sector.

"Very little has been proposed regarding the electric power sector, apart from reinforcing the CFE," Javier López de Obeso, a Mexico-focused energy lawyer at ScottHulse in San Antonio, Texas, told BNamericas.

"We have not heard any plans regarding the relationship between the CFE and natural gas, or about more potentially controversial themes, such as nuclear power," he said.

"López Obrador has not been very clear regarding renewables. During the campaign he bemoaned the fact that wind turbines ruin landscapes, but those comments probably do not reflect the policy he is going to adopt.

"But while he was not the favourite candidate among investors, López Obrador has more recently shown himself to be more perceptive of the importance of the private sector's participation in many sectors, including electric power," he said. "I don't want to talk about uncertainty, but there is a transition phase coming and in which a definition of what is going to happen in the electric power sector is lacking."

Some pollsters had predicted prior to the election that, while he would win the presidency, López Obrador's Morena party would not achieve a majority in congress.

"He won't be able, for example, to reverse the energy reform, because it's a constitutional reform, and in order for him to do that, he'd need to have a two-thirds majority, which he's not going to have," Anna Szterenfeld, Latin America and Caribbean regional manager for the Economist Intelligence Unit, told BNamericas in an interview earlier this year.

"There are fears that he would try and reverse [the reform] or at least slow it down. But on the macroeconomic front, I don't think he's going to try to risk the reputation for stability that Mexico has achieved over recent years," Szterenfeld said.

Morena did win a majority in congress however, as well as the governorships of five of the country's 32 states, including the mayoralty of Mexico City, in addition to mayoralties in nine state capitals. That means that Morena will govern around 56 million Mexicans, or 47% of the total population, according to the national population council (Conapo).

And in what will be a reassuring sign to many regarding the energy sector, US energy secretary Rick Perry said in mid-August after meeting with his incoming Mexican counterpart Rocío Nahle that López Obrador's aim to achieve greater energy self-sufficiency is good news

"It's a good goal for Mexico. I tip my hat to the president-elect for having that as a goal," Perry was quoted by local media as saying.

Perry also said that the US is unconcerned about the effect AMLO's proposal would have on US refiners, since other markets, some of which are also in Latin America, would make up for diminished Mexican demand.

Mexico is dependent on natural gas imports from the US for electricity generation and industrial production, as it ramps up its pipeline capacity and converts gasoil-fired power stations to natural gas.

Figure: Mexico Energy Matrix
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