Proposed Mexico energy reforms would be radical

Significance

The aim is to restore the market dominance of the state-owned Federal Electricity Commission (CFE). The move would sideline private players and potentially force the closure of some private generation plants. It would also have serious ramifications for hydrocarbons and mining.

Impacts

• Approval could lead to insufficient electricity supplies, increased manufacturing costs, reduced foreign investment and lower GDP growth.
• The proposed changes could affect foreign investment in areas beyond the energy sector.
• Negative consequences for foreign firms in Mexico and for the environment could increase tensions with the United States and the EU.