Mexico Judge Suspends Controversial Power Law Indefinitely

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A Mexican judge suspended indefinitely President Andres Manuel Lopez Obrador’s controversial electricity law, throwing it into a legal limbo that may lead the government seek a constitutional reform of the energy sector.

The “definitive” suspension of the law, which favors a state utility over private power companies, was granted Friday by Juan Pablo Gomez Fierro, a federal judge specializing in economic competition, according a copy of the decision seen by Bloomberg News.

The ruling will have general effect and be in force as the courts process injunctions filed against the new law, a process that could take weeks.

The energy ministry could challenge the suspension in court, but it may take as long as eight months to resolve, said Rodolfo Rueda, a lawyer at Thompson & Knight. If the Supreme Court takes the case, it would potentially be held up by the courts for years.

“It is still in process but the effects are suspended until a sentence is passed,” he said.

The legislation approved earlier this month prioritizes power generation by the state utility Comision Federal de Electricidad over private renewable projects. Investors and environmentalists have opposed the law, saying it will hurt existing electricity projects and deter private investment in Mexico.

Friday’s ruling follows several earlier, provisional suspensions, on the grounds that the law would harm the market and hurt consumers. Another judge, Rodrigo de la Peza, will decide next week whether to make his own provisional suspension indefinite.

Anticipating a protracted legal battle, Lopez Obrador has pledged to embark on a constitutional reform of the energy sector and dial back the 2013-2014 opening of the industry, which ended almost eight decades of state monopoly.

Reforma newspaper reported the ruling earlier.

AMLO, as the president is known, suggested that a constitutional reform would come after June’s midterm elections, at which his Morena party is trying to retain the control of congress it currently holds in collaboration with smaller parties. While Morena is clearly ahead in the polls, it may well fail to reach the two-thirds super majority needed to change the constitution by itself.

©2021 Bloomberg L.P.

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