Page 4 - LatAmOil Week 16 2022

COMMENTARY Y
LatAmOil COMMENTAR LatAmOil

The president notes the outcome of the vote (Photo: LopezObrador.org.mx)
The failure of CFE reform

and the future of oil and gas

AMLO’s failed attempt to secure CFE’s leading role is a signal of willingness to continue

waging a similar fight on behalf of Pemex, though not always through legislative means

MEXICO’S President Andres Manuel Lopez Why does this matter for the oil and gas
Obrador has, on the face of it, suffered a major industry? Of course, it is significant because the
WHAT: political defeat over the past week. power-generating sector is a major consumer
Mexico’s president On April 17, Easter Sunday, Mexican law- of natural gas and petroleum-derived fuels. But
has failed to secure a makers gathered to vote on the president’s draft the fate of the CFE reform bill is also important
super-majority of votes electricity reform bill, designed to reform the because it is a signal of the political course Lopez
for his power sector constitution to ensure the Federal Electricity Obrador is likely to follow for the rest of his six-
reform bill. Commission (CFE), the country’s state-run year term in office.
power provider, has a majority share of the
WHY: domestic market. The measure would have AMLO’s aims
The draft legislation guaranteed CFE a 54% share of the electricity In all likelihood, the president already knew,
would have guaranteed
CFE a majority share market, cancelled all private sector contracts before he submitted the bill to the National
of the domestic power and restricted sales by independent power pro- Congress, that he probably could not secure the
market. ducers (IPPs) to CFE. necessary number of votes.
Some 275 legislators voted for the bill, while He might have done so prior to Mexico’s
WHAT NEXT: 223 voted against it. As such, Lopez Obrador did mid-term elections, in which his political party,
AMLO is likely to impose secure a simple majority, but he did not win the MORENA, and its allied factions lost their
more administrative two-thirds super-majority necessary to amend super-majority in the legislature, but he had lit-
measures in Pemex’s the constitution as he had hoped. tle chance of achieving his aims under current
favour. In short, the electricity reform bill failed. conditions

P4 www. NEWSBASE .com Week 16 21•April•2022