AMLO claims past governments skewed the energy market in favor of private capital

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Tentative signs of progress are emerging in talks between the private sector and Mexico’s government towards forging a compromise on President Andres Manuel Lopez Obrador’s divisive plan to strengthen state control of the power market.

Mexico’s desire to avoid conflict with the United States over a regional trade pact has increased pressure for an accord, and the private sector has recently signaled that some of the government’s concerns about the power market are reasonable.

At the same time, business leaders have taken heart from the engagement of one of Lopez Obrador’s most trusted aides in the process, which could help to open a path toward consensus.

“I’m seeing a change towards pragmatism, towards taking practical decisions,” said Enoch Castellanos, Castellanos, president of Canacintra, a major Mexican industry association.

Still, Castellanos and others familiar with discussions said the two sides remain a long way from the agreement. The president’s office did not reply to the request for comment.

Lopez Obrador, a left-leaning resource nationalist, argues that changing the law is imperative because past governments skewed the electricity market in favor of private capital, weakening state power firm Comision Federal de Electricidad (CFE) and leaving the public at the mercy of business interests.

To prevent the CFE from being undercut by excess capacity, business groups have indicated they are ready to discuss changing the rules that govern so-called self-supply permits, which allow companies to generate their own power.

They have also indicated a willingness to increase the transmission fees paid by private providers of renewable energy in order to relieve pressure on the cash-strapped CFE.

Such changes could give the president political victories in his revamp of the market, even as negotiators seek other changes to avoid breaching the United States-Mexico-Canada Agreement (USMCA) trade deal, people close to the talks say.

Business lobbies are encouraged by the role in behind-the-scenes talks that they say have been taken by Interior Minister Adan Augusto Lopez, a close ally of the president.

“He’s a man with great political ability and I think it’s a good sign,” said Ildefonso Guajardo, an opposition lawmaker who was one of the architects of USMCA when serving as Mexico’s economy minister in the previous centrist government.

Business representatives see Lopez as likelier to help craft a deal on the bill than Energy Minister Rocio Nahle or CFE boss Manuel Bartlett, who have staunchly defended the original plan.

The interior ministry did not reply to a request for comment. Neither did the energy ministry nor the CFE.

Source: El Economista