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12 November 2018
A member of the House of Representatives, who is also coordinator of the representatives of the Morena political party (the party which was founded by President Elect Andrés Manuel López Obrador and holds a majority in Congress) recently introduced a legislative proposal that seeks to amend several provisions of the Organic Law of the Federal Public Administration. The bill was introduced at the president elect's request.
The proposed reform aims to grant the central government significantly more control over the public administration, including with regard to the energy sector. According to the government, the reform will enable the Ministry of Energy to carry out its purpose correctly by granting it the power to control Mexico's energy regulatory bodies – in particular, the National Hydrocarbons Commission and the Energy Regulatory Commission, which are currently autonomous government entities.
The energy regulatory bodies' independence was a key change introduced by the 2013 energy reform in order to ensure that they could handle specialised technical matters without being influenced by political agendas. Reducing the regulatory bodies' independence and autonomy will build on the increased uncertainty surrounding investment in the sector.
Following the proposed reform, the Ministry of Energy will act not only as policymaker, but also as supervisor of the regulatory bodies, which will be sectorised under the ministry. Essentially, the National Hydrocarbons Commission and the Energy Regulatory Commission will no longer be independent from a technical and operational standpoint.
This lack of certainty, combined with bidding round delays and other policies and statements regarding the energy reform, will likely have the unintended consequence of delaying much-needed investment in the energy sector, as participants are likely to wait before fully investing in what was, just a few months ago, a steadily growing industry.
For further information on this topic please contact Carlos Ramos Miranda at Hogan Lovells BSTL SC by telephone (+52 55 5091 0172) or email (firstname.lastname@example.org). The Hogan Lovells BSTL SC website can be accessed at www.hoganlovells.com.
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