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The Negotiation of Energy Laws in Mexico’s Congress

May 10, 2014
The Negotiation of Energy Laws in Mexico’s Congress

Following the December, 2013 publication of important reforms to the Mexican Constitution pertaining to energy, in April, President Enrique Peña Nieto presented the proposed new energy laws to Mexico’s Congress, with the majority of the bills being presented to the Senate and others to the House of Representatives.At the beginning of June, the Senate’s Energy and Legislative Review Committees established a schedule for the review and discussion of the pending presidential bills, dividing such into four reports to be reviewed between June 10 and 23. The proposed schedule was questioned by the legislators of the Democratic Revolution Party (Partido de la Revolución Democrática, PRD), as they considered, among other reasons, that discussing such during the World Cup soccer tournament was a strategic way to avoid public and transparent deliberations.In the Mexican House of Representatives, the Energy, Finance and Budget Committees have held hearings during the last few weeks with high ranking public officials from the Department of Finance and Public Credit (Secretaría de Hacienda y Crédito Público, SHCP), Pemex, the Federal Electricity Commission (Comisión Federal de Electricidad, CFE), and the central bank (Banco de México), in order to understand the technical aspects of the President’s proposals relating to income, budget and public debt.Meanwhile, on June 11, representatives and senators of the National Action Party (Partido Acción Nacional, PAN) filed a proposed Energy Transition Law before the Congressional Standing Committee, which seeks to comprehensively address the incentives that the Mexican government will grant for the use of clean energy, the rules for the use of sustainable energy and energy efficiency, and funding mechanisms for “green” projects, including other policies intended to promote long term energy conservation in Mexico, sustainable development and climate change mitigation.The same day, the corresponding committees in the Mexican Senate approved the report along with a draft of the decree that sets forth the Hydrocarbon Law and amends various related ordinances. On June 14, the same committees approved the report with a draft of the decree that sets forth the Electricity Industry Law and the Geothermal Energy Law, which were circulated the day before and submitted for a public discussion that unfortunately lasted only one hour. The PAN stated it had reservations as to all articles in such report, specifically arguing that the energy package must be reviewed in its entirety once the other reports are approved. Nevertheless, three days later, the PAN abandoned the energy reform negotiations and accused the government and the Institutional Revolutionary Party (Partido Revolucionario Institucional, PRI) of hindering the progress of negotiations being held on proposed electoral reforms, specifically as to the regulation of political coalitions.Meanwhile, the Senate has concluded the special sessions period convened in this term. It is highly likely, in any case, that negotiations will continue in private while differences among the parties as to the electoral reform are resolved. Government sources predict that public discussion will resume in the coming weeks and that, in the second half of July, the plenary sessions of both chambers will finally approve the complete energy legislative package. There is confidence that the new energy laws will comport with constitutional rules and principles, and that such will guarantee the opening of the industry and provide for the desired result of achieving effective regulation and a solid institutional framework, while fully addressing the urgent need for diversification of Mexico’s energy mix for the 21st century.

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