State will dominate Mexico’s electricity sector

Significance On October 30, a constitutional amendment was enacted reinstating Mexican Petroleum (Pemex) and the Federal Electricity Commission (CFE) as state-owned enterprises that can be favoured by the government. Reinforcing that position, ENSE establishes that the CFE will become the dominant player in the electricity sector with private sector actors holding lesser status. Impacts Restoration of trust that the government will provide legal and regulatory certainty to private investments may take years. If the CFE is unable to provide sufficient electricity at competitive prices, economic growth could be damaged. Investments by the CFE may exacerbate public spending pressures and increase the fiscal deficit and public debt.