Last night, Andrés Manuel López Obrador (AMLO) was declared the victor in Mexico’s 2018 presidential elections. As President, his policies will be crucial for the economic and productive sectors of Mexico, including the energy industry. Read on to find out the implications of his presidency for the industry.
According to his Alternative Nation Project 2018-2024 available at INE’s webpage, AMLO sees Mexico’s energy self-sufficiency as a key priority. In Morena’s manifesto the party says it will aim for universal access to energy for the whole country, as well as access to water, sewage and food. Nevertheless, not much is said about how this will be done beyond the need for decreasing and even stopping gasoline imports.
AMLO’s Pejenomics is a document created to further explain some economic and financial details of the proposals of the President-Elect and calm doubts of the private sector. The document classifies the Alternative Nation Project 2018-2024 by six different points. The most important point for the energy industry is number two, where it is said that AMLO will create a mixed public and private investment fund to detonate energy-related infrastructure projects in the country. The document also states the importance of boosting innovation and state-of-the-art technology Made in Mexico, especially in terms of clean energies, as well as training and incentivizing the preparation of national human capital in strategic sectors, such as energy. This is supported by INE’s candidate details for AMLO webpage, where in his second proposal AMLO says he will use the energy industry to boost Mexico’s development and potential. He also says the entire economic policy will be used to reactivate the economy and create jobs. But as he only talks about oil and gas E&P and refining, it is not yet clear what path will be taken in terms of electricity generation.
What Does it Mean?
On June 26, The Economist cast doubts on the President-Elect’s ability to meet his campaign promises. “Mr López Obrador has a shaky grasp of economics—urging some people not to pay their bills tends to drive up prices for everyone else, for example. And he has little respect for rules or institutions,” the article said. After the election, Moody’s Investor Service published a press release saying López Obrador’s win brings short-term market volatility and raises risks for the oil and gas industry. But the agency admitted it will take time to see how the new administration’s public policy will unfold. “The López Obrador administration’s policy direction will be somewhat uncertain for the remainder of this year, given Mexico’s lengthy political transition process and the influence of the outgoing administration on the country’s near-term fiscal outlook,” the press release said. Overall, the agency remained optimistic. “Polices that disrupt the business of private banks are unlikely in the medium term,” it stated.
Stakes are high in the country’s energy industry, and to cover the expected increase of energy demand in Mexico, the Mexican Agencies for Solar Energy (Asolmex), Wind Energy (AMDEE) and Hydraulic Energy (AMEXHIDRO) and Cogenera México called, on June 11, 2018, for the then-candidates to seek energy sovereignty and diversification of the energy matrix. This was combined with requests for competitiveness and certainty in long-term prices of energy, together with training of engineers, technicians and specialists. Furthermore, the agencies also mentioned the importance of including indigenous communities and taking care of the environment while expanding energy-related infrastructure to optimize and maximize the production of electricity through clean sources.
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