After a Constitutional reform on October 2024, President Claudia Sheinbaum has sent to the Mexican Congress a set of laws, which aim to transform the country's energy landscape by returning control to the state, although redefining private participation.
The reform is influenced by both national and global factors. On the first case, a judicial war started during 2018 and 2024 due to changes from and barriers imposed by previous Federal Administration (many of those changes declared unconstitutional by the Mexican Supreme Court). With that, foreign investments both on Power and Oil industries where affected and halted. This reform looks to regain track on the way private companies can again participate, hopefully creating a so much needed bridge or renewed investment trust. On the international landscape, it is marked by such factors as conflicts in the Middle East and Ukraine, where notions of energy independence and national sovereignty were reinforced. Also, the need of energy on international trade phenomena such as ‘nearshoring’ is a key factor behind this new strategy.
The 2025 reform partially reverses the 2014 opening up to private sector investment, but several schemes including power private generation and private power commercialization are kept although a 54% state predominance is set (which was not included on 2014 reform). On hydrocarbons, new schemes of collaboration are set, eliminating the previous ‘licences’ scheme in place since 2013. Ownership of oil resources are maintained as the sole property of Mexico.
The rationales of the reform are based on the following:
- State Control: Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) are re-established as state-owned public companies. Previously they were considered ‘productive state entities’ meaning they were compelled to be profitable and compete with private companies within their respective activities. This change aims to reinforce that they are public-social companies, and as such, that pure economic rationales shall not affect Mexican final users.
- Constitutional Changes: Articles 25, 27, and 28 of the Mexican Constitution were amended to ensure state dominance in the energy sector.
- Focus on Social Welfare: As explained, reform emphasizes social welfare over economic profitability.
- Secondary Laws: A set of secondary laws strengthens the efficiency and transparency of Pemex and CFE have been sent. They will soon be approved on which case, the final version will be available.
- Energy Transition: The state is responsible for transitioning to renewable energy sources. This is a joint effort of both Pemex and CFE.
The reform includes the decrees (under Congress discussion) of the following laws:
- CFE Law (in substitution of CFE Law 2014)
- PEMEX Law (in substitution of PEMEX Law 2014)
- Power Sector Law (in substitution of Power Industry Law 2014)
- Hydrocarbons Law (in substitution of Hydrocarbons’ Law 2014)
- Geothermal Law (in substitution of Geothermal Law 2014)
Also, the reform looks for the restructuring of key energy agencies. As such, the Energy Regulatory Commission (CRE for its acronym in Spanish) and the National Hydrocarbons Commission (CNH) are eliminated, with their functions transferred to a new commission called National Energy Commission (CNE), which will be operationally dependent of the Ministry of Energy. Although the previous independence of CRE and CNH are eliminated, it is still soon to know if CNE will be an effective entity or a burden for private investments.
Please do not hesitate to contact Claudio Rodriguez for further information
