Mexican leader fails to pass limits on foreign energy firms

Associated Press

Mexico City – Mexican President Andrés Manuel López Obrador failed to find enough votes late Sunday to pass a constitutional reform limiting private and foreign firms in the electrical power industry.

The reforms would have undone much of the market opening in power generation carried out by his predecessor in 2013, but also raised concerns among U.S. officials and companies.

On Monday, López Obrador called the opposition members of congress who voted against the reform traitors, claiming foreign firms “bought the legislators.”

Mexican President Andres Manuel Lopez Obrador speaks during a ceremony to commemorate in Mexico City's main square the Zocalo, Aug. 13, 2021.

The lower house of Congress voted 275 to 223 in favor of the measure, but that was well short of the 333 votes needed for constitutional changes.

The vote marked one of the few legislative setbacks López Obrador has suffered since taking office in late 2018.

“Yesterday a group of legislators committed an act of treason,” López Obrador said. “Instead of defending the interests of the nation, of the people, they openly defended foreign firms that rob and prey.”

Alejandro Moreno, the leader of the old ruling Institutional Revolutionary Party, shot back “they are the traitors, and they haven’t solved the crime problem and have left women abandoned,” referring to increasing homicides against women in Mexico.

But López Obrador has vowed to submit separately a bill that would nationalize the mining of lithium, which was part of the reform bill that failed Sunday.

The bill submitted for debate Monday would create a state-owned company for lithium mining, something López Obrador said would “nationalize lithium.”

Only one lithium mine in Mexico, operated by a Chinese firm, is anywhere near close to starting production. That would presumably be taken over by the government if the bill passes on a simple majority.

The electricity reform sought to limit foreign-built renewable energy plants and guarantee at least 54% of electricity would be bought from government-owned generating plants, which are dirtier. Private and foreign companies, which have built wind and gas-fired generating plants, would have been allowed to keep up to 46% of the market.

The debate Sunday began with nearly all 500 deputies present. The ruling party and its allies needed a two-thirds majority to pass the constitutional reform.

Some pro-government legislators chanted ’’Traitors″ at the opposition, which objects to the reform. Opposition lawmakers shouted: ’’It won’t happen.″

Given the atmosphere, López Obrador’s Morena party failed to win over any significant number of opposition legislators.

Critics said the reform would hurt investors and their confidence in Mexico. The companies could have sought court injunctions, and the U.S. government could have complained under a free trade agreement and then put compensatory tariffs on Mexican products.

Pro-government legislators have already passed a law giving the state utility more discretion in deciding whose electricity to buy, but it remains stalled by court challenges.