Mexican business groups slam president's electricity bill

Mexican business groups say a proposed new law on electricity supply will hurt investors and force Mexicans to buy more expensive electrical power from older, dirtier government-owned plants

Virus Outbreak-Mexico-President (Copyright 2020 The Associated Press. All rights reserved.)

Mexican business groups said Tuesday that a proposed new law on electricity supply would hurt investors and force Mexicans to buy more expensive electrical power from older, dirtier government-owned plants.

President Andrés Manuel López Obrador has proposed undoing much of the work over the last seven years to establish cheaper, more renewable energy, in large part through opening private generating plants, wind and solar farms.

The bill would mandate that the first power to be used would have to be from government plants, many of which burn coal or fuel oil. Privately run natural gas and renewable energy would be the last in line.

López Obrador is trying to fast-track the bill through Congress in 30 days. His Morena party said it is needed to protect the state-owned electricity company, which is painted as being at a disadvantage in comparison to private companies

The business groups contend that the law would put at risk Mexico's international commitments for reducing emissions and that it would hurt investors who, under the existing rules, invested heavily in Mexican plants.

“This opens the way to indirect expropriation of private plants, by changing the ground rules to create a monopoly” for the state-owned Federal Electricity Commission, the Business Coordinating Council said in a statement.

The Mexican Federation of Industry Chambers said the law “condemns the country to consuming polluting and expensive power, and if it becomes law, will cause irreversible damage to our country's economy and competitivity.”

The Mexican Institute for Competitivity said the proposed law “goes against the Constitution and international trade agreements, specifically the U.S.-Mexico-Canada Agreement. It would also take the country away from the path of the transition to clean energy, and lead to noncompliance with the Paris Accords.”

López Obrador is known for his love of the oil industry and state-owned firms, and he has had a testy relationship with the private sector in his first two years in office.

Mexican industries have long been hobbled by the country's relatively expensive and unreliable electricity supply. A 2013 legal overhaul opened the way for private companies, many of them foreign, to invest more heavily in the sector.