AMLO’s energy policy set to backfire

Creeping state intervention in energy policy boosts uncertainty and undermines PEMEX, CFE and other regulatory entities’ reliability, while imposing new challenges for existing and potential private market participants. Moreover, significant cash injections and regulatory favoritism have failed to improve these State-owned Enterprises’ profitability. As a result, the government’s focus on the so-called energy sovereignty has reduced public revenue, and austerity measures are insufficient to compensate for the losses. In contrast, the pace of development of energy projects in the country has continued to decline. This cross-commodity insight examines the latest governmental regulatory decision impacting the energy sector (oils and power) and Mexico’s country risk. This analysis includes Wood Mackenzie’s Upstream and Power Services information in collaboration with Maplecroft’s risk index.