The Mexican Energy Ministry Reasserts its Authority in the Electricity Sector

On May 15, using the COVID-19 health emergency as justification, the Ministry of Energy (SENER) issued a decree that will dramatically impact the renewable electricity sector in Mexico while threatening at least $6.5 billion in investments in renewable energy projects. The decision is the most brazen yet from the administration of Andrés Manuel López Obrador (AMLO) on its march to gain control over the oil & gas and electricity sectors in the name of energy independence. The changes effectively vest with the Mexican government the power to cut off the sale of privately generated renewable power in favor of generation from the state-owned utility, CFE, though the decree allows the Energy Ministry to declare certain projects as strategic to achieving the objectives of AMLO’s energy policy, thus keeping them viable. With USMCA not coming into effect until July 1, investor’s seeking protection from the decree can turn to NAFTA’s expansive investor protection provisions to protect their interests in affected power generators, although a more immediate course of action may be to challenge the decree in the domestic courts through an amparo.

Full Report: Monarch Client Alert

Open in New Page                         Download File