Mexico's New Federal Electricity Commission Chief to Review Private PPAs
The new administration of President-Elect Andrés Manuel López Obrador will take over the Mexican government for a six-year term on Dec. 1, 2018. The President-Elect has been outlining his administration's energy strategy, including appointing Manuel Bartlett as the general director of Comisión Federal de Electricidad (CFE). Bartlett has been a critic of the government's energy reform of 2013.
On Aug. 3, 2018, Bartlett addressed the media and expressed his wariness of contracts awarded by CFE to private investors for selling electric power and the intent of the new administration to perform a review of such power purchase agreements (PPAs).
At the moment, there is no information as to what contracts would be reviewed and whether they would include those involving independent power producers (IPPs) or those awarded at long-term auctions. The "French Model" of government participation in the electric market seems to be considered.
The main concerns are why CFE is not generating enough power to cover demand and the analysis of the prices currently paid to private generators. In addition, the intention seems to be that CFE has a "social" tariff, reduces losses and complies with anti-corruption policies.
In the meantime, it is advisable to review the text of all contracts, including those in negotiation, to assess the particular situation of an investment.
Holland & Knight's energy law attorneys have extensive experience on advising private investors and government bodies in a variety of projects in the electricity sector. For more information, contact Holland & Knight's Mexico City office.
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