U.S. airs concerns over Mexico energy plan, points to economic risk

MEXICO CITY, Jan 21 (Reuters) – U.S. Energy Secretary Jennifer Granholm on Friday flagged concerns about Mexico’s plan to tighten state control of the electricity market, saying it could impede investment and economic development in North America.

Granholm met President Andres Manuel Lopez Obrador and senior members of his Cabinet, including Energy Minister Rocio Nahle, on Thursday and Friday on a visit to Mexico City in which the Mexican power market initiative drew close scrutiny.

“In each meeting, we expressly conveyed the Biden-Harris administration’s real concerns with the potential negative impact of Mexico’s proposed energy reforms on U.S. private investment in Mexico,” Granholm said in a statement.

“The proposed reform could also hinder U.S.-Mexico joint efforts on clean energy and climate.”

Later, Granholm said the United States wanted to partner Mexico on economic integration and development, but that this had been rendered “a challenge” by the electricity proposal – even as she expressed hope matters could be resolved.

Granholm said competitive energy markets that benefit North America should be upheld, and that she had been assured Mexico is committed to supporting clean energy and working out current disputes with projects within the rule of law.

Officials, lawmakers and business leaders say in private they believe Lopez Obrador’s power market initiative will be watered down, but it is unclear by how much or whether it will be enough to restore bruised investor confidence.

Earlier, Lopez Obrador said his government would address future energy disputes with companies “case by case” as he took questions on the meetings with Granholm. read more

Lopez Obrador last year launched his constitutional reform to boost state control of the electricity market, arguing it was a matter of national security, and that past governments had skewed the market in favor of private capital. read more

The president, a leftist resource nationalist, has often couched his opposition to foreign and private participation in the energy sector as part of his drive to eradicate corruption.

“We were talking about all this, and (Granholm) understands that our mission is to banish corruption from our country as well as showing our openness to dialogue, and to go case by case,” he said, referring to potential disputes.

He acknowledged “a small number” of both U.S. and Canadian companies have complained, but did not name any.

Granholm said Mexico had so much potential renewable energy that if fully realized, it could power the country at least 10 times over, create millions of jobs, and develop an export industry geared for a world seeking clean energy solutions.

At an event with Granholm, Mexican Finance Minister Rogelio Ramirez de la O said Mexico would work with the rest of North America to lure manufacturing investment across the Pacific from Asia and reduce trade deficits.

After Granholm’s meeting with Lopez Obrador on Thursday, Foreign Minister Marcelo Ebrard on Twitter forecast that “understanding” would be reached on clean energy in North America.

Reporting by Dave Graham
Additional reporting by Raul Cortes Fernandez in Mexico City and Paul Grant in Washington
Editing by Jan Harvey and Grant McCool

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