MEXICO CITY — Mexico’s lower house of Congress on Tuesday approved a contentious bill aimed at increasing state control of the electricity market that has angered private businesses and could cause disputes with some of the country’s top trade partners.
The lower house, controlled by President Andres Manuel Lopez Obrador’s National Regeneration Movement (MORENA) and its allies, voted by a large majority to pass the legislation in general terms before moving on to discussing reservations.
The fast-track bill sent to Congress this month by Lopez Obrador aims to give priority to state power utility the Comision Federal de Electricidad (CFE) over private power generators. It must still be voted in the Senate.
The new legislation opens the door to renegotiating and potentially terminating contracts with independent producers, and could encourage a raft of lawsuits from companies.
It also aims to prioritize the CFE in energy dispatch and eliminate its obligation to buy electricity through auctions.
Lopez Obrador is attempting to roll back a reform passed under the previous government that opened up the energy market to private capital, arguing it put the state at a disadvantage.
MORENA lawmakers have said investments made under that reform would be safeguarded, and the text of the bill suggested that the measures would not be applied retroactively.
However, private sector executives say it is too early to say how those investments could be affected by the legislation.
The U.S. Chamber of Commerce said the bill presented by Lopez Obrador would be a breach of the United States-Mexico-Canada Agreement (USMCA) trade pact that took effect last year. (Reporting by Adriana Barrera; Editing by Christopher Cushing)