Will AMLO’s Energy Counter-Reforms Be Successful?

Greg Ahlgren, partner at Diaz, Reus & Targ: “Halfway through his presidential term, AMLO continues to exalt the virtues of state-owned enterprises, but the underlying economic rationale, if it exists, is difficult to discern. Rather, his current efforts to consolidate market share and power for the CFE seem purely political, aimed at further solidifying the populist message being pitched to his political base. Currently, Mexican families have no choice as to their electricity provider for their homes, and the state-owned provider has no meaningful accountability to its consumers. Now, if the proposed energy reforms (which are, really, proposed ‘counter-reforms,’ as they would undo the energy market liberalizations undertaken by the presidential administration of Enrique Peña Nieto) become law, the largest commercial consumers of electricity would also become captive customers of the CFE.