AMLO’s electricity reform will cost Mexico at least 70 billion USD in forced compensation

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AMLO’s reform will set Mexico back with deficient and expensive energy for consumers; an increase in costs could be up to 20%.

The Senate warned that the Electricity Reform proposal promoted by the Federal Government of the 4T,  far from being beneficial for the country, will enhance environmental damage and would slow down the development of clean energy in Mexico and increase its cost by up to 20%.

This was stated by Clemente Castañeda, coordinator of the Citizen Movement caucus in the Senate, adding that it will have a high impact on public finances due to the international compensation it will have to face.

Before the  Secretary of Energy of the United States, Jennifer Granholm,  with whom he held a meeting with legislators in the plenary session of the Senate, Castañeda pointed out that the initiative will even have an impact on the bilateral relationship between Mexico and the United States.


“Three issues will have a high impact not only for Mexico but also for the bilateral relationship between our countries. In the first place, the potential environmental damage that this reform would bring by stopping the development of clean energy in Mexico and concentrating on the maintenance of polluting plants of the  Federal Electricity Commission (CFE), most of which are more than 30 years old. age and almost 50% of its power generation capacity are done with high costs and with fuels that are harmful to the environment,” he said.

In addition, with the changes presented by President López Obrador through this reform,  Mexico would become a serious obstacle to combat climate change mitigation, and the commitment of the Mexican nation to reduce emissions would be questioned.

Senator Clemente Castañeda. CFE goes backwards. 

A second sensitive issue, assured the legislator, is the damage to the entire electricity supply chain in our country.

“It is worrying that this reform will turn us into a country with a deficient and expensive energy system for the country and for consumers, since the increase in costs, according to BBVA studies, could be up to 20% for the final recipient, it would also be a highly polluting system with constant failures”, he pointed out.

The foregoing, he affirmed, would have a negative impact on all sectors of the economy, on all production chains and therefore on trade relations between Mexico and the United States.

He mentioned that the damage to both national and foreign private investments in the electricity sector would be another factor of economic weakening and uncertainty, in addition to the contradictions with the  Trade Agreement between Mexico, the United States and Canada (USMCA).

“The approach of canceling all current contracts, limiting private access to the market and disappearing regulatory bodies, would leave a wide margin of discretion and corruption, not to mention the very high impact on national public finances, since the cost of compensation that the Mexican government would have to pay could be up to  7% of GDP, about 70 billion dollars, according to estimates by the Confederation of Industrial Chambers of Mexico (Concamin)”.

Given the concern of a multitude of specialists, academics, businessmen and activists, and in the midst of the process of defining the reform in the Congress of the Union, Castañeda maintained that it is essential to know the vision of the United States, as it is a neighbor of Mexico and its main trading partner.

Source: realestatemarket.com.mx

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