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AMLO’s project would not impact private renewable energy companies

(Bloomberg) – Mexico’s President Andrés Manuel López Obrador’s electricity bill will not cancel existing contracts with private companies for renewable energy production, a ruling party lawmaker said in an apparent concession to build consensus on around the controversial constitutional reform.

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Existing government contracts for wind and solar energy in the hands of private companies will continue if the bill is approved, Manuel Rodríguez González, president of the Energy Commission of the Chamber of Deputies and a member of the Morena party, said in an interview. by López Obrador. More details on how the contracts will be enforced will be included in future secondary laws that have not yet been made public, he added.

AMLO, as the president is known, seeks to amend the Constitution to ensure that Mexico’s state power company, the Federal Electricity Commission, or CFE, gains market share to achieve a 54% monopoly in power generation. Introduced earlier this month, the bill establishes that carrying out the president’s reform requires “the cancellation of all permits granted for the generation of electricity.”

“The text of the reform is not going to say that the contracts are canceled,” said Rodríguez when asked about the renewable companies, but did not specify if the bill will be modified or if the secondary laws will clarify this. “What it is about is actually a modification of contracts.”

The bill’s specification that CFE has a 54% market share and private companies 46% can happen gradually, Rodríguez said. This will happen slowly, he said, by prioritizing three things: the hydroelectric power of the state company, the growth in demand and the absorption capacity of CFE that previously had both self-supply contracts and independent producer contracts. It will not be achieved by absorbing the capacity of existing renewables projects, he added.

“Existing investments are guaranteed, they have no problem,” he said. “They will continue. What is certain is that the electricity growth planning system is going to be supervised by the Government ”.

López Obrador’s press office did not immediately respond to a request for comment on any changes to the energy bill.

The bill would cancel self-supply agreements that allow companies to generate electricity primarily for their own use and will have independent power regulators taken over by government agencies. It seeks to cut the participation of the private sector in electricity generation from 62% to 46%, according to the Secretary of Energy, Rocío Nahle.

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