Feature: After Congress' forums on Mexico's electricity sector end, Lopez Obrador to hold his own

Mexican President Andres Manuel Lopez Obrador is planning another round of forums about the constitutional changes proposed for the country's electricity sector even though Mexico's Congress has been holding its own public discussions on the issue for weeks.

The forums organized by Congress allow experts to express their views both in favor and against the Lopez Orador's initiative to modify articles of the constitution related to Mexico's power sector, which is designed to increase the dominance of the state electricity utility CFE by restricting the participation of private producers. These "open parliament" forums began in mid-January, are to finish Feb. 28 and are to help lawmakers make final decisions on the initiative. The vote in Congress is expected around September.

Unlike those held by Congress, the forums to be held by the Lopez Obrador administration, after the Congress concludes it own, will be specifically for those speaking in favor of the initiative, Energy Secretary Rocio Nahle Garcia told journalists Feb. 16. The format of the administration's forums is not yet decided, Nahle Garcia said.

So far, there have been 20 days of debate in the open parliament, with both sides expressing their views on competition, environmental impacts, economic benefits and potential negative consequences. But despite the fanfare, the debate is not expected to matter much to a final decision.

What has been seen during the debates is a "legitimizing exercise" and not the right mechanism to inform the public of the real implications of theproposal, Duncan Wood, senior advisor to the Wilson Center's Mexico Institute, told S&P Global Platts.

"There has not been a serious effort to put facts on the table" said Wood, highlighting that the positions have not been impartial.

PRI holds the cards

Many of the speakers during the open parliament who spoke in favor of the proposed changes have actuallybeen CFE executives, union officials and other employees.

Most observers queried by Platts continued to believe that the initiative, as is, has little chances of being passed. One of the main reasons for this is that the Lopez Obrador's Morena party does not have the sufficient number of votes in Congress to pass it and opposition parties are expected to vote against it.

PRI, the second-largest opposition party in Congress by number of lawmakers, is the only party that can help Morena pass the initiative, said Carlos Petersen, a senior analyst for Latin America at the Eurasia Group, told Platts. However, PRI is likely to ask for the reform to take into consideration some of the demands from the private industry, and Lopez Obrador has shown he is not willing to do this, he said.

"The incentives are not there for PRI to go along with the president," Petersen said.

Jose Maria Lujambio, a partner at law firm Cacheaux, Cavazos & Newton, agreed that PRI is the only party that has opened the door for some dialog and said it might go along with some sort of reform, but with some demands.

"I believe PRI would not agree without demanding that the wholesale market remains intact," Lujambio said. "Another thing PRI should not let pass is the elimination of the independent regulators in the industry. Those should be strengthen instead of being eliminated."

US shying away

Many in the Mexican energy sector have questioned why the US government has not been more vocal about its view of Lopez Obrador's proposals, which could negatively affect US power producers.

David Goldwyn, chair of the Atlantic Council Energy Advisory Group, said one reason is because the fate of the proposal remains uncertain.

"Countries do not take foreign policy decisions based on actions others might take," Goldwyn said. The US has done its job in making clear its position that the reform would be bad for the environment, bad for the Mexican economy and bad for investments, as well as potentially violating the US-Mexico-Canada trade agreement, he added.

While market participants in Mexico were right to expect more from the US, Mexico's energy policy is not a priority in the bilateral relationship, as is migration, said Goldwyn, who served as the US State Department's special envoy for international energy affairs under Barak Obama. The US would not spend a lot of political capital on Mexico's energy debate, particularly as previous attempts by Lopez Obrador to change the rules of the sector have been blocked in court, he added.

The Wilson Center's Wood agreed that energy is not in the top five topics of the US-Mexico relationship and added that pushing Mexico on the energy issue could jeopardize success in other issues. The Biden administration has so far been focused on building an institutional environment so that difficult issues can be solved in an institutional way, he said.

"The wisdom of that approach will soon be tested," Wood said.