Court battle: Dozens of Canadian, European energy companies sue the Mexican government
The López Obrador government introduced new operating rules for renewable energy companies. "They want to prevent state-owned CFE from losing market share to the private sector," say sources within the government.

The results do not support Rocio Nahle's performance as Mexico's Energy Secretary. With Mexican oil giant Pemex still in the midst of the same crisis - if worse - that was inherited from the government of Enrique Peña Nieto, the Secretary of Energy has now set herself the goal of preventing the state-owned energy company CFE from losing penetration in the electricity sector.

That objective explains Nahle's desperate lobby to put the brakes on private wind and solar power generation plants altogether. "The real reason is that they don't want to have competition so as not to affect CFE's income," explained government officials who do not share Nahle's strategy.

In recent days, Nahle's lobbying has intensified. First, she had the National Energy Control Center (CENACE) publish an emergency agreement to limit the operation of these private plants and thus guarantee the security of the Mexican electricity system. It only mentions that "the wind and photovoltaic power plants affect the reliability of the system", with no further arguments.

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The Secretariat of Energy then requested that this agreement be published as a matter of urgency in the Official Journal of the Federation (DOF), without going through the National Commission for Regulatory Improvement (Conamer), as required by law, under the argument that the Covid-19 crisis put the Mexican electricity system under stress. The same request - to avoid regulatory impact analysis - was made to Conamer, until this week headed by César Hernández.

"Given that probable compliance costs are identified, the Agreement should be subject to the regulatory improvement procedure through a Regulatory Impact Analysis and additionally comply with deadlines and obligations provided for in the General Law on Regulatory Improvement," the agency replied.

Just a few days later, Hernández submitted his resignation to the National Commission for Regulatory Improvement. He was fired because he refused to side with Nahle. "Today my cycle as head of Conamer closes. I thank AMLO, who appointed me as commissioner, and Economy Secretary Graciela Márquez, who proposed me," the former official wrote. There was no gratitude or farewell for the Secretary of Energy.

But this polemic created additional problems: letters of complaint arrived from Canada and the European Union because, they say, Nahle García's decision " threatens" their investments in Mexico.

Rocio Nahle.

"This resolution jeopardizes the operation and continuity of renewable energy projects of Canadian companies in Mexico. This agreement is added to the rest of the measures, changes in laws and policies that attempt against renewable energy investment in your country", the Canadians complained.

"Canadian companies have trusted Mexico as a country for their investments, but all the measures taken in recent months risk, in the short term, investments of more than 450 million dollars, as well as the creation of more than 1,000 jobs," they added. And they requested an urgent meeting to find a solution.

Along similar lines, the embassies of the European Union countries wrote a letter: "We had already raised the concerns of several companies involved in the development and promotion of clean energy in Mexico in relation to some government decisions that are affecting the sector. That is why we had requested a meeting with the Secretariat of Energy, which has not taken place so far".

"But unfortunately, there has been another event that increases our concern. If this initiative were to go ahead, it would have a negative impact on 44 projects in 18 Mexican states, which would put at risk total investments -including from European Union companies- of 6.4 billion dollars", they add, and conclude with another urgent request for a meeting.

This is not the first episode in which Secretary Rocio Nahle's controversial performance has put foreign trade and Mexican diplomacy at risk. A month and a half ago, amid the increase in Covid-19 cases worldwide, the Energy Secretary delayed negotiations between OPEC member countries, refusing to reduce Pemex's barrel production.

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After prolonging the international dialogue for a few hours, an agreement was reached by which the United States, in the voice of President Donald Trump, agreed to reduce the 250,000 barrels of oil that Saudi Arabia and Russia demanded from Mexico. It is still a mystery what the Mexican government offered in exchange for the help of the White House, even though President López Obrador has insisted more than once on the non-existence of secret pacts.

The new announcements for the energy sector have unleashed a legal battle on the part of energy companies, and it is already expected that Rocio Nahle and the director of CFE, Manuel Bartlett, will have to open a negotiation table with hundreds of affected companies.

So far, this confrontation in court already involves 60 injunctions filed by private companies to prevent an impact of the new rules enacted by Cenace and Sener, such as the publication of the new Policy on Reliability, Safety, Continuity and Quality in the National Electricity System.

President López Obrador, meanwhile, explained that his government will be respectful of the law and warned that the legal offensive will not make him change his position. "We are going to defend our position in court. The CFE and Sener officials have instructions to defend our decision that there will be no privileges for the companies".

AMLO also confirmed that they will be open to dialogue but warned that "nothing is above the national interest. It would be a strategy on both sides, avoiding an escalation in the courts. So far, 14 multinational wind and photovoltaic companies were granted the protection they filed for, achieving temporary judicial suspensions of the Reliability Agreement, ordered by the National Energy Control Center (Cenace). This suspension means that firms such as Engie, Ene, Elecnor and Tirna Solar can continue to install plants in 23 parks in 13 states in the country to be able to dispatch energy.

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