By Adriana Barrera
MEXICO CITY (Reuters) – Mexico should hold no more oil auctions and must favor state-run firms in energy production, President Andres Manuel Lopez Obrador said in a memorandum that crystallized a sharp break with the business-friendly policies of his predecessor.
The 8-page memorandum seen by Reuters broadly reflected what Lopez Obrador has said publicly since taking office in December 2018, but gave notice of his intention to roll back the market liberalization carried out in 2013-14 under the last government.
An official confirmed the authenticity of the document dated July 22, which said the government would “put a stop to juicy private deals at the cost of bad public business.” The document was addressed to officials at the country’s energy regulators.
At the heart of constitutional changes pushed through by former President Enrique Pena Nieto were reforms to encourage private sector investment in oil and gas fields via a series of tender auctions that drew in many multinational corporations.
Those contracts should be respected, “without new auctions being called,” the memorandum said, adding that the government remained open to private sector tie-ups in oil extraction and refining, provided the national interest was not affected.
Lopez Obrador argues that past governments skewed the energy sector in favor of private interests at the expense of national oil company Petroleos Mexicanos (Pemex), state power firm the Comision Federal de Electricidad (CFE), and taxpayers.
The president has vowed to revive both firms, and in the memorandum said hydroelectric power produced by the CFE should be given top priority in supplying the national power system, followed by electricity generated by the CFE’s other plants.
Next in the order of precedence should be solar and wind power produced by private firms, and then electricity generated by privately-run combined cycle plants, the document said.
All forms of subsidy provided to private sector power producers should be ended, the memorandum said.
(Reporting by Adriana Barrera; Additional reporting by Dave Graham; Writing by Anthony Esposito; Editing by Frank Jack Daniel and Marguerita Choy)
