Mexican President Claudia Sheinbaum is poised to gain greater control over the national oil company, Pemex, and the state electricity utility, Comision Federal de Electricidad (CFE), through pending legislation that is likely to secure approval from Mexico’s Chamber of Deputies, the lower house of Congress. The legislation involves reclassifying Pemex and CFE from being considered “state productive companies” to “public companies.” This reclassification mandates that these entities prioritize government social and economic goals instead of corporate profits. The proposed changes continue the agenda initiated by Sheinbaum’s mentor and predecessor, former President Andrés Manuel López Obrador (AMLO), who previously advocated for policies aimed at consolidating state control over the energy sector.
If the Chamber of Deputies approves the legislation, which is expected given the ruling coalition’s substantial majority, the Senate would then need to ratify it. Energy Minister Luz Elena González emphasized that the legislation aims to align the decision-making processes of Pemex and CFE with the government’s objectives rather than private sector interests. With the new classification, the government intends to maintain control of 54% of the domestic electricity supply while reserving clear rules for private sector participation. Additionally, the plan includes stripping lithium concessions—critical for battery production—from private companies in order to manage those resources solely under the government’s purview.
During AMLO’s time in office, both Pemex and CFE received extensive capital infusions and tax relief amounting to approximately $80 billion in an effort to manage Pemex’s significant debt levels. Despite these efforts, the production of crude oil has continued to decline over the past two decades. Sheinbaum’s administration has expressed that while it seeks the productivity of Pemex and CFE, the current competitive climate set against private firms has not followed public regulations, leading to a flawed governance structure. Sheinbaum pointed out that private companies operate under mercantile laws, which clash with the governmental mission of the state-owned enterprises.
The current proposal emerges against a backdrop of previous legislative attempts to reinforce state energy producers and limit private sector involvement. In February, Mexico’s Supreme Court invalidated a power reform that aimed to give CFE precedence over privately-owned firms in the electricity market. The court ruled that the earlier law contravened principles of competition, highlighting the ongoing tension between government policy and judicial oversight in Mexico’s energy sector. The new proposal, which echoes the goals of AMLO’s earlier reforms, reflects the ruling coalition’s sustained focus on restructuring the energy landscape in favor of state control.
AMLO has consistently criticized prior administrations for entering into agreements he deemed inequitable, and his administration aimed to rectify this by placing control of energy resources firmly in the hands of the state. By transforming Pemex and CFE into public companies, the legislation would further entrench this perspective, reinforcing the government’s role in ensuring that sectors critical to national interests are insulated from market-driven pressures and foster a more state-centric energy policy.
The trajectory of this legislation illustrates the ongoing evolution of Mexico’s energy sector under Sheinbaum’s leadership, which seeks not only to enhance the operational scope of state-owned enterprises but also to reshape the competitive dynamics within the industry. The expected passage of this bill through the legislature represents a significant step towards consolidating energy authority within the government, raising critical questions about the future landscape of energy production and management in Mexico, especially as private companies prepare for a more regulated environment. As this legislation continues to unfold, it will be vital to monitor its implications on both the economy and broader energy security within Mexico.
