Mexico would be willing to resolve disputes over the US investments by private electricity companies in the country, after Mexico’s electricity reform. According to a report by the news agency Associated Press, Mexican President Andres Manuel Lopez Obrador met with US energy officials and both sides strengthen their ties.
Firstly, as we reported previously, the Mexican government passed an energy reform last year, which favors national companies in electricity dispatch to the grid. The reform favors national companies, even if they produce electricity with coal or combined cycled processes; which are a lot dirtier than clean energy privates.
Moreover, renewable energy companies will be last in line in energy dispatch or may have their contracts overruled. Early last year, the Mexican government announced it would renegotiate clean energy contracts with Iberdrola and ten more companies.
As a result, experts, market watchers, private companies; and US and Canadian officials expressed their concerns about the new Mexican policy. The argument was that the bill threatened private and substantial investment, even more for renewable energy companies.
In fact, the reform would cancel contracts under which 34 private plants sell power into the national grid. The plan would also declare “illegal” an additional 239 private plants that sell energy directly to corporate clients in Mexico. Almost all of those plants are run with renewable energy sources or natural gas.
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Mexico commited to supporting clean energy and to resolve disputes
Consequently, by mid-2021, Canadian and US energy officials met with Mexican Economy Minister Tatiana Clouthier to try to raise their concerns and engage in a solution. Later in the year, disputes arose with the US oil and gas sector, after Pemex’s takeover of the Zama oilfield. Overall, 2021 was indeed a difficult year for bilateral energy relations.
Nevertheless, Mexican President said he received this week a list of US and Canadian firms who had voiced complaints; said he would “review them if they believe there has been an injustice.”
According to statements issued Friday, the US government has “real concerns with the potential negative impact” on US firms and investments.
Energy Secretary Jennifer Granholm said. “In each meeting, we expressly conveyed the Biden-Harris Administration’s real concerns with the potential negative impact of Mexico’s proposed energy reforms on US private investment in Mexico.”
Finally, she also remarked. “The proposed reform could also hinder US-Mexico joint efforts on clean energy and climate. (However) I was assured that Mexico is committed to supporting clean energy; and resolving current disputes with energy projects within the rule of law.”