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Mexico's lower house approves divisive electricity bill

·1 min read

MEXICO CITY, Feb 23 (Reuters) - Mexico's lower house ofCongress on Tuesday approved a contentious bill aimed atincreasing state control of the electricity market that hasangered private businesses and could cause disputes with some ofthe country's top trade partners.

The lower house, controlled by President Andres Manuel LopezObrador's National Regeneration Movement (MORENA) and itsallies, voted by a large majority to pass the legislation ingeneral terms before moving on to discussing reservations.

The fast-track bill sent to Congress this month by LopezObrador aims to give priority to state power utility theComision Federal de Electricidad (CFE) over private powergenerators. It must still be voted in the Senate.

The new legislation opens the door to renegotiating andpotentially terminating contracts with independent producers,and could encourage a raft of lawsuits from companies.

It also aims to prioritize the CFE in energy dispatch andeliminate its obligation to buy electricity through auctions.

Lopez Obrador is attempting to roll back a reform passedunder the previous government that opened up the energy marketto private capital, arguing it put the state at a disadvantage.

MORENA lawmakers have said investments made under thatreform would be safeguarded, and the text of the bill suggestedthat the measures would not be applied retroactively.

However, private sector executives say it is too early tosay how those investments could be affected by the legislation.

The U.S. Chamber of Commerce said the bill presented byLopez Obrador would be a breach of the UnitedStates-Mexico-Canada Agreement (USMCA) trade pact that tookeffect last year.(Reporting by Adriana Barrera; Editing by Christopher Cushing)