Mexico's Senate passes divisive bill to strengthen state utility CFE

FILE PHOTO: A general view shows high voltage power lines owned by Mexico's state-run electric utility known as the Federal Electricity Commission (CFE), in Santa Catarina, on the outskirts of Monterrey, Mexico February 9, 2021. REUTERS/Daniel Becerril

MEXICO CITY (Reuters) - Mexico’s Senate passed on Tuesday a divisive bill aimed at strengthening state utility CFE that has angered private businesses and could cause disputes with some of the country’s top trade partners.

The bill was approved with 68 votes in favor and 58 against. The lower house had approved the bill on Feb. 23 without changes and President Andres Manuel Lopez Obrador, who had sent it to Congress, must now sign it.

This is the time “to face the future and take back control of the resources of our country,” said Ana Lilia Rivera, a senator of the president’s ruling Morena party.

Reacting to the approval, Energy Minister Rocio Nahle said the new law will give Mexico more energy security. “The changes will help to strengthen our state company CFE economically and in terms of generation,” Nahle wrote on Twitter.

Once the law takes effect, CFE plants will have priority in dispatching electricity they generate into the grid, even if they use more polluting fuel oil and coal as sources.

CFE will no longer be obliged to buy energy through auctions and can reverse contracts with independent energy producers - many of whom use renewable sources - signed under previous administrations. CFE can also revoke self-supply permits.

Opposition senators accused Morena of violating a law that gives Mexicans the right to a clean environment and subject the country to potentially hefty compensation to investors who challenge the law.

“This project is a disaster,” said Claudia Ruiz Massieu, a senator for the PRI party that promoted and approved, together with allies, the 2013/2014 reform that allowed private participation in Mexico’s energy sector.

Reporting by Adriana Barrera; Writing by Stefanie Eschenbacher; Editing by Shri Navaratnam and Christopher Cushing