Mexico City, October 8th, 2021.
On September 30th, 2021, the Mexican President submitted to the Chamber of Deputies a bill of amendments to modify articles 25, 27 and 28 of the Mexican Constitution. The main purpose of the referred bill is to guarantee the energy security through a reliable supply of electric energy at low prices.
Proposed amendments included in the bill are:
- Electric energy produced by private companies shall not be higher than 46% of the national production.
- The National Centre of Energy Control (“CENACE”) which currently is the independent operator of the National Electric System would become part of CFE.
- The Federal Electric Commission (“CFE”) would be the sole entity in charge of all electric activities, including those that as of today are carried out by CENACE.
- Clean Energy Certificates will be cancelled.
- The scheme known as self-supply (auto abastecimiento) is to be cancelled.
- Lithium is incorporated as a strategic mineral, not be subject to concessions.
- Activities carried out by the Mexican State related to the electricity will not be considered as a monopoly.
- The bill of amendments proposes the disappearance of the Energy Regulatory Commission (“CRE”) and the National Hydrocarbons Commission (“CNH”). Their structures and powers will become part of the Energy Ministry (“SENER”).
The bill of amendments will be analyzed by the Chamber of Deputies and subsequently analyzed and voted by the Mexican Senate.
For the bill of amendments to be approved by the Chamber of Deputies and the Senate the vote of 2/3 of the Deputies and Senators present at the moment of voting will be required.
In addition, any bill of amendments related to modification to the Mexican Constitution would necessarily imply its approval by the majority of the local States in Mexico, meaning by 17 local Congresses.
Should the bill of amendments be approved by Mexican Congress such amendments would not be subject to a challenge before Federal courts.
Notwithstanding the above, since the amendments could contravene several fundamental rights (e.g. environment, legitimate certainty, freedom of competition in the market, among others) the new provisions included in the bill of amendments would be violating several international treaties and conventions to which Mexico is a party and could cause international liability by the Mexican State, which would need to be declared by international environmental or investment arbitration tribunals.
Should the bill of amendments be approved its implementation would need to be made through secondary laws, regulations, and administrative agreements of general application, which could be subject to challenge in national courts through the procedural means established for such purposes, meaning constitutional appeals (known as amparo) and/or administrative litigations.
The proposed bill of amendments has already raised numerous opinions regarding its content and the repercussions it could have if approved by Congress.
For the moment, it will be relevant to follow up any outcomes and the discussions expected to be held in the Chamber of Deputies and the Senate in connection with this bill of amendments.
The lawyers of the energy, infrastructure and administrative area at firm are available for any questions or comments on the above.
S I N C E R E L Y,
Juan Carlos Serra
Jorge Eduardo Escobedo