Mexico Senator Open To Energy Bill Changes to Avoid Lawsuits

(Bloomberg) -- Mexico’s senate majority leader said a new government bill that would favor the state utility over private investors requires dialogue with the companies to ease their heavy opposition and avoid ending in lawsuits.

Senator Ricardo Monreal told Bloomberg News that the electricity legislation sent by President Andres Manuel Lopez Obrador to congress on Monday would be the top economic bill before lawmakers in the first part of the year. He pledged to work with private energy companies to make sure the proposal doesn’t clash with agreements such as Mexico’s trade deal with the U.S. and Canada, know as USMCA.

“We are going to listen to them and the bill can be modified, enriched and improved,” Monreal said via video conference on Tuesday, noting that investors are threatening legal action if the law is passed in its current form. “I have a lot of hope that it will be reviewed closely and that it won’t violate the USMCA or the constitution.”

Other controversial bills seeking to regulate outsourcing and to restructure Mexico’s independent regulators are unlikely to go to the floor until after June’s midterm elections, said Monreal, a member of the ruling Morena party.

“We don’t have documents to discuss, we’re just talking about what could come,” he said of the two bills. “I don’t think we’ll have time in this session because we only have three months.”

Monreal said he prefers “regulation over elimination” of outsourcing. “If subcontracting was bad or used for labor abuses, you have to standardize it and improve it,” he said.

Since taking power in late 2018, Lopez Obrador has vowed to prioritize Mexico’s embattled state-run companies at the expense of private operators. The new bill establishes which plants have priority in dispatching electricity, starting with hydroelectric plants from the state utility, followed by other government facilities. Only after that would private renewable sites be able to supply the network with their power.

The proposal also removes CFE’s obligation to buy electricity through competitive auctions, and calls on the country’s energy regulator to revoke self-supply permits that don’t meet certain conditions.

Read More: Mexico’s AMLO Proposes Bill Prioritizing State Power Utility

Mexico’s biggest business lobby, the CCE, has called the bill an “indirect expropriation,” saying it will lead to more polluting and expensive electricity. Lopez Obrador, who has repeatedly clashed with the private sector, is looking to hold on to his majority in both houses of congress during the midterms.

During the interview, Monreal also said a controversial bill his chamber passed in December to make the central bank buy bulk cash from local lenders is under review in the lower house. He wouldn’t comment on reports it had been pulled from the agenda of top priorities.

Lopez Obrador raised issues with the bill last month, leading to speculation it will be shelved.

“It’s not dead, it’s just out partying,” Monreal joked.

Monreal said he is talking to local executives from Facebook and Twitter on Tuesday to discuss a social media bill that would protect personal data and fight fake news.

“It’s not to censor or eliminate social media, but more to protect users from unilateral and arbitrary measures” by those media companies, Monreal said. He declined to offer details about the bill, including when he would present it.

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