A Mexican government initiative in Congress to overhaul electricity sector rules in favor of the state is worrying European firms and governments, as well as crimping investment, the European Union’s ambassador to Mexico said on Thursday.
Ambassador Gautier Mignot said the reform that prioritizes state-run utility the Comision Federal de Electricidad (CFE) over private capital, risked hindering companies’ efforts to meet targets of increasing their renewable energy supply.
“Some companies are going to say, OK, if I can’t meet these objectives – which are global corporate objectives – well, I’ll need to leave Mexico,” Mignot told reporters during an event at the EU’s official representation in Mexico City.
Mexico’s government argues the overhaul is vital on the grounds that past, corrupt administrations rigged the market in favor of private interests, to the detriment of consumers, the CFE and state oil company Petroleos Mexicanos (Pemex).
But it has fed considerable concern among Mexico’s allies.
Mignot underlined the need for energy contracts with Mexico to be respected, while saying “some adjustments” to rules could be made on occasion if negotiated jointly with investors.
Both European companies, which have invested some $13 billion in renewable energy in Mexico, and governments, were concerned about the impact of the market overhaul, Mignot said.
“The brakes are really on new investment because there’s a context of uncertainty, which means it’s very difficult to invest in the current context,” he added.
“Not all (companies) are going to withdraw from Mexico, but some … are going to reduce their activity a lot, companies from this sector and other sectors.”
This is because European headquarters of companies were instructing their foreign operations to reach net zero emission targets in the next “two, five, 10 years,” he said.
Mexico Daily Post