Mexico power law draft calls for public-private tie-ups, but under state control

By Adriana Barrera

A legislative proposal in Mexico backed by the government would allow for public-private electricity generation projects, but only when the state holds a stake of at least 54%, according to a draft of the bill seen by Reuters on Tuesday.

Backed by President Claudia Sheinbaum, the proposal is expected to be unveiled by the leftist leader on Wednesday, part of implementing legislation to an energy reform passed by ruling party lawmakers last year.

The bill would ensure that state-owned power company Comision Federal de Electricidad, known as the CFE, supply at least 54% of electricity dispatched to the national grid, in line with the majority stake advocated by Sheinbaum's likeminded predecessor, former President Andres Manuel Lopez Obrador.

Sheinbaum, who took office in October, has pledged continuity with Lopez Obrador's policy preferences, including his call for more state control over energy.

Both leaders argue that national sovereignty requires that the CFE serve as the power sector's main driver, and have described it as better able to provide services to the population compared with profit-maximizing private companies.

The text of the bill enshrines the CFE's role as system guarantor, while ordering the power system to operate under conditions that ensure reliability.

The proposal will be considered by Congress, where lawmakers from the coalition led by Sheinbaum's Morena party hold comfortable majorities in both chambers.

Some elements of the bill appear to go beyond Lopez Obrador's tight embrace of oil and gas, and skepticism toward green power.

The draft of the bill stipulates that the national power system should promote de-carbonization and the energy transition away from fossil fuels.

Sheinbaum, a trained physicist who for years studied energy engineering and climate change, has often said she favors more renewable energy even though she has been vague on specifics.

The draft would also require that self-supply permit holders can only sell any surplus power they generate to the CFE, and that permits and contracts already authorized under current law would remain valid until they expire.