Mexico's Lopez Obrador Pledges Legal Rollback of Energy Overhaul

Mexico’s left-leaning presidential contender wants to revise laws that opened the country’s energy markets to foreign investment, vowing to hold a referendum on the issue and make changes based on the result.

Andres Manuel Lopez Obrador, who is leading in the polls for Mexico’s July 2018 presidential election, has said President Enrique Pena Nieto’s energy overhaul was foisted on an uninformed public. He criticized it for failing to lower fuel and electricity bills as promised.

Lopez Obrador, who previously ran twice for president, ruled out “authoritarian action,” including presidential decrees to undo the energy laws, or moves to either nationalize the industry or confiscate assets. If the Mexican people support the laws in a referendum, he’ll accept the decision and work to boost investment, he said. If they’re rejected, he plans to use legal avenues, even turning to international courts, to roll back Pena Nieto’s overhaul.

“The anchor for confidence is going to be the rule of law in Mexico,” Lopez Obrador said in an interview at Bloomberg headquarters in New York. “There’s going to be a revision of the structural reforms through democratic procedure.”

The energy laws required two-thirds support from Congress to change the constitution, and Lopez Obrador said he would abide by the legislature’s decision whether to reverse them if they’re rejected in a referendum.

Proceeding Legally

“We’re going to proceed legally,” he said. “If the congress rejects it, that’s another issue. Only then it would be their responsibility.”

The approval rating for Pena Nieto, who can’t run again, plunged to a record low in January after the government raised gasoline prices by the most in two decades. Meanwhile, Mexico’s growth slowed last year, dragged down by falling oil production.

In December, Mexico awarded four blocks in a deep-water oil field in the Gulf of Mexico called the Perdido Basin to companies including Chevron Corp., Exxon Mobil Corp., Total SA and CNOOC Ltd. The auction was part of the laws signed by Pena Nieto in 2013 that broke state-owned Petroleos Mexicanos 75-year monopoly on the nation’s oil industry. As many as 600 oil and gas blocks will be offered by 2019.

Revising the energy-industry opening -- a cornerstone of Pena Nieto’s effort to attract foreign investment and boost economic growth -- doesn’t mean private companies would be excluded, Lopez Obrador said. Mexico needs foreign capital to build refineries instead of importing gasoline from the U.S., he said.

‘Three Motors’

“You can’t move Mexico forward only with public investment,” he said. “You need to crank up the three motors of the economy: public sector, private sector, social sector.” He didn’t specify, though, how he might continue to draw foreign investment under a different energy agenda.

Lopez Obrador said he was confident he could work with a Congress in which his political party doesn’t gain a majority to implement his agenda. As mayor of Mexico City, he was able to work with an opposition legislature, he said.

“Politics were invented to avoid confrontation and to reach agreements,” he said. “Even in the most difficult circumstances, with politics you can reach an understanding.”