Paper: Creation of Mexico’s energy reform lacked key stakeholders’ input

While Mexico’s energy reform will most likely produce vigorous activity, progress and growth in the country’s energy sector, the reform was not the result of the participation of all relevant players, nor were all relevant policy options discussed, according to a new paper from the Mexico Center at Rice University’s Baker Institute for Public Policy.

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The paper, “Energy Reform and Political Representation: The Importance of Negotiation and Public Deliberation,” was co-authored by Jose del Tronco, a professor at the Latin American Social Science Institute Mexico, and Mara Hernandez, a researcher at Centro de Investigacion y Docencia Económicas, where she coordinates the Legal Studies Department’s Program on Negotiation, Mediation and Dialogue.

The authors analyzed how the reform came to be approved in 2013 by 77 percent of the senators in the Mexican Congress. They examined the reform’s primary supporters (a center-right, market-centric coalition) and detractors (a broad, nationalistic center-left faction), the multidimensional interests at play and the negotiation strategies used. They also analyzed the quality of the priority deliberation process to determine the degree of legitimacy of the reform.

“The energy reform will most likely produce dynamism and growth in the energy sector in Mexico, especially considering that its content was the result of highly complex technical analyses,” the authors wrote. “Those who participated in the design of the secondary laws are mostly proven specialists in the field and had as a primary goal improving the effectiveness, productivity and fiscal sustainability of the Mexican energy sector. However, the reform was not the result of the participation of all relevant players, nor were all relevant policy options discussed. Players who were excluded or only participated marginally cannot expect to share in the benefits of the reform. In the case of some communities, their exclusion surely will translate into mistrust toward energy projects, as well as conflict and an impasse in their relationship with companies.”

The paper was written for a Mexico Center research project examining the rule of law in Mexico and the challenges it poses to implementing the country’s energy reform. The project’s findings are compiled in a Spanish-language book and are being posted on the Baker Institute’s website in English.

Mexico’s energy sector had been under strict governmental management since 1938. This changed in 2013 and 2014 when Mexico amended its constitution and passed legislation overhauling its energy sector to allow private and foreign investments. “The most recent energy reform in Mexico, which allows for private and foreign investment in the exploration, production, storage and transportation of hydrocarbons, is the most radical institutional change this country has undergone since the legendary expropriation of oil companies by President Lazaro Cardenas in 1938,” the authors wrote.

“Representative democracy allows for partial representation of interests and perspectives when the votes of the majority coalition are sufficient,” the authors wrote. “The cost of such partiality is a deficit of democratic legitimacy that may translate into technical shortcomings, a propensity for social conflict, resistance to its implementation and rejection of the reform by citizens. The alternative is to correct such shortcomings through public policies based on a more inclusive deliberation process, such as the one that gave rise to the Energy Transition Act (which contains goals and mechanisms for the incorporation of renewable energies into the country’s electric grid). Technocracy and democratic legitimacy do not always get along well, but they are not theoretically incompatible.”

About Jeff Falk

Jeff Falk is associate director of national media relations in Rice University's Office of Public Affairs.