CURRENT LANDSCAPE OF DISPUTES IN THE MEXICAN ENERGY SECTOR
The last decade has seen many changes in legislation and government attitudes regarding foreign and private investors in the Mexican energy sector. However, since the arrival of president Andrés Manuel López Obrador in 2018, the government has taken an openly hostile approach to the private and foreign investors who invested in the Mexican energy market in the previous five years. This approach has led many experts to fear an increase in energy disputes in Mexico, not only in electricity and renewables, but also in oil & gas. However, while this has been true in certain cases, surprisingly it has not been seen across the board.
Energy sector in Mexico
For over 75 years, activity in the Mexican energy sector was considered exclusive for the state and a matter of national sovereignty. This paradigm changed with the constitutional reform championed in 2013 by president Enrique Peña Nieto. However, with the election of Mr López Obrador in 2018, a counter-reform has occurred.
2013 reform
In December 2013, one year after Mr Peña became president, Mexico approved the constitutional reform of articles 25, 27 and 28. The objective of the reform was to allow foreign and private investment in the energy sector. Thus, what had previously been a monopoly of state actors became an investment opportunity for domestic and international players.
In 2014, as a trickledown effect of the 2013 reform, Congress passed several laws, the objective of which was to liberalise the energy sector. Examples include the Hydrocarbons Law and the Electricity Industry Law (LIE), the latter providing for the “generation and commercialization of electric energy are services provided under a free competition regime”.
Jan-Mar 2023 issue
Hughes Hubbard & Reed LLP