Mexico • www.gli-manchester.net

The Mexican government has proposed a package of 20 reforms, including the dissolution of two energy sector autonomous bodies (the focus of this bulletin) from the power and hydrocarbons sector. In doing so, the government has taken another significant step to roll back the neoliberal reforms that sought to hand over the country’s energy system to private companies. ‍

‍Power is Coming Back to the People

On August 23rd 2024, the Mexican Chamber of Deputies approved a bill that proposes the dissolution of the Energy Regulatory Commission (La Comisión Reguladora de Energía–CRE). This body was set up in the early 1990s to prevent the national public utility Comisión Federal de Electricidad (CFE) from impeding the entry of for-profit independent power producers (IPPs) into the country’s electricity system. Several other neoliberal-era bodies are also likely to be shut down, including the Federal Economic Competition Commission (COFECE). President Andrés Manuel López Obrador (AMLO) introduced the reform bill in February 2024, and it will now proceed to the Senate.

Established in many Global South countries under neoliberal structural adjustment of the 1990s, so-called independent regulators have been a central feature of the World Bank’s “standard model” of electricity privatisation. In Mexico, a succession of right-wing administrations enthusiastically embraced the Bank’s proposed reforms, and empowered CRE to increase the presence of private power generation companies (known as independent power producers, or IPPs)

‍Right-Wing and Business Groups Protest

‍Angered by the likely dissolution of CRE, in recent weeks the Mexican right-wing and business groups have condemned the initiative claiming it is inconsistent with Mexico’s climate commitments made under the Paris Agreement. The right is trying to depict AMLO’s policy as one that’s hostile to renewables while favouring fossil fuels.

The American Clean Power Association (ACP) mentioned that the reform could negatively affect clean energy development and strain trade relations between Mexico and the United States. The Mexican Wind Energy Association (AMDEE) warned that this reform would halt investments in the wind industry for at least the next two years. But it’s quite the opposite: the shutdown of CRE creates space to help fulfil the government’s commitment to accelerate the energy transition. Limiting the role of the IPPs while expanding the role of the public utility CFE allows for the deployment of low-carbon energy and reduced dependency on imported fossil fuels (particularly gas) to proceed on a public basis while attempting to repair the damage inflicted on Mexico’s energy sovereignty by previous administrations.

There is speculation that the Biden administration will request an independent dispute settlement panel under the USMCA. In March 2023, US Trade Representative Katherine Tai hinted at possible escalation during a Senate Finance Committee hearing.

‍CRE’s Record: Serving Private Capital

‍Formed in 1993, under the administration of President Carlos Salinas de Gortari, CRE was populated by enforcers loyal to the neoliberal agenda designed by the World Bank and the IMF.

CRE approved power purchase agreements (PPAs) with IPPs that involved CFE having to purchase electricity at high prices. During this period, most of the IPPs were multinationals based in the US, Spain, and Japan that purchased shale gas from the US, thus increasing Mexico’s dependence on fossil fuel imports and helping to sustain the lucrative fracking boom north of the border.

Between 2013-2014, President Peña Nieto’s administration made more than twenty legislative changes and three amendments to the Mexican Constitution to facilitate more private sector ownership of the power sector. Operating under Peña Nieto’s orders, CRE approved a large number of PPAs with wind and solar companies, allowing the administration to declare itself a champion of climate protection.

‍Ruthless Inefficiency and AMLO’s Reclaiming

Elected by a large margin (31% difference) in 2018, President López Obrador criticised CRE for issuing too many contracts to IPPs. On July 22, 2020, AMLO sent a memorandum to CRE officials. Referring to Peña Nieto’s reform as a “policy of pillage,” AMLO wrote, “We soon learned the result of this robbery and its corresponding deception: nothing was gained by the nation, everything was translated into lucrative business for private companies and corrupt politicians. . . It is time to correct the course of the policy of surrender that has been imposed on the energy sector.”

In October 2020 then Energy Minister Rocío Nahle García made a three-hour presentation to Mexico’s Senate where she pointed out that CRE had issued PPAs that would generate electricity far in excess of what Mexico actually needed. However, CFE was contractually obligated to pay for the excess power under 25-year PPAs, financially crippling the utility.

Recently elected with 59.5% of the vote, incoming president Claudia Sheinbaum has declared that her administration will continue to strengthen CFE, and defend energy sovereignty as a central objective of her government. With a supermajority in Congress, there is speculation that Sheinbaum will take steps to repeal Peña Nieto’s 2013 amendment to the Mexican constitution that permitted private ownership of the power sector and other strategic industries.

If this happens, it will mark another important milestone in Mexico’s effort to chart a public approach to the energy transition that a growing number of unions are committed to supporting.

Electrical Workers’ Union Supports CRE’s Disappearance

The Foreign Affairs Secretary of the Mexican Electrical Workers’ Union (SME), José Humberto Montes de Oca Luna, published an important statement on SME’s response to the proposed reform. “The disappearance of the CRE represents a hard blow to the neoliberals and their privatisation policies. There will be no turning back despite their now futile legal challenges, despite the scandalous media criticism from corporations and international capitalists who lament the end of the plundering of our country,” said José Humberto Montes de Oca Luna.

Montes de Oca explained that the CRE facilitated private participation in the electricity sector under “perversely advantageous conditions”. “The public sector Federal Electricity Commission (CFE) assumed most of the financial risk of private investments while, by buying energy in bulk from the corporations, it guaranteed high revenues for the private sector through long-term payment commitments at fixed prices, whether or not their electricity was sold,” he said.

Moving forward, “all indications are that the 4T under the new political conditions will be able, without reservations, to pass it [energy sector reform] as formulated by AMLO or even go further. Dr. Claudia Sheinbaum is expected to give a strong push to the energy transition to clean energy,” he said.

‍The Hydrocarbon Sector: Oil Workers’ Perspective

In addition to the dissolution of the CRE, “Plan C” includes the proposed elimination of six other autonomous bodies, including the National Hydrocarbons Commission (CNH), installed in 2009 under former president Felipe Calderon. A few years later, the 2013 constitutional energy reforms of Peña Nieto strengthened the CNH by approving additional powers to enter into contracts and carry out bids in energy matters.

“For the oil technicians and professionals of the UNTyPP it is clear that the National Hydrocarbons Commission, CNH, together with the Energy Regulatory Commission, was an instrument for the privatisation of our company Petróleos Mexicanos (PEMEX),” said Silvia Ramos Luna, leader of the PEMEX engineers union (UNTyPP).

Ramos Luna explained: “The work carried out by the CNH fulfilled its objective of advancing the privatisation of PEMEX, of all the activities it developed perhaps the most important were the rounds for the delivery of the oil fields, it designed a programme for the delivery of 507 oil fields and managed to deliver 107, this delivery of our heritage was stopped with the arrival of Andrés Manuel López Obrador, who on 3 December 2018, when another round was to be carried out it was suspended, to this day no more rounds have been carried out. Not to mention that the sale of pipelines and storage tanks was also stopped.”

“We strongly support the disappearance of the CNH,” she said.

Trade Unions for Energy Democracy (TUED) is a global, multi-sector trade union initiative to advance democratic direction and control of energy in a way that promotes solutions to the climate crisis, energy poverty, the degradation of both land and people, and responds to the attacks on workers’ rights and protections. TUED is part of the Global Labour Institute Network.

Ciudad Juarez, violence and women workers

Ciudad Juarez, in the state of Chihuahua, on the US-Mexico border, is an industrial centre with 330 maquilas (assembly factories) owned by American or European enterprises, and they employ about 300 000 people (Infobae, 2020). Most of the employees recruited by these factories come from the southern states of Mexico where opportunities of employment are quite low and where criminal violence has increased enormously in the last 2 decades. The reasons for the flourishing of these industries in this border area is the low salaries^[1], the closeness to the US and the NAFTA, the USMCA treaty between the US, Mexico and Canada and the lack of trade unions.

Ciudad Juarez is well known not only in Mexico but even worldwide for an enormous number of feminicides – several hundred women since the mid-1980s – that started to be reported in the 1990s. During the period 2015 to 2020 we can see an increase, from 43 in 2015 to 205 in 2020 (Ellas tienen nombre, 2020). This increase was particularly strong during the pandemic period, 2020 to 2021.

Women, a majority of the workers in the 1980s, remain in the lowest categories in production, but they are also extremely flexible and adapt to all kinds of tasks and skills as their high turnover in the industry demonstrates (Ramírez, 2020). The pandemic hit female labour particularly. Of every ten unemployed because of the pandemic, seven are women. Women represent 71% of those who have not recovered employment (Cullell, 2021). (Nationally, women’s participation in the labour market decreased from 45% of all women aged 15-60 in 2019 to 39% during 2020, which means a setback of about 15 years.)

Finally, Electrolux has about 5000 employees in its plants in Ciudad Juarez. The company has its own ‘codes of conduct’ and has also committed to global guidelines regarding workers’ rights.^[2] Regarding this conflict, thanks to the involvement of a Swedish activist, several Swedish trade unions and a Swiss-based union alliance, IndustriALL Global Union, pressed Electrolux which, after 15 months, compensated seven of the 32 workers who had sued the company; none of them were women. The rest had not resisted, and signed agreements with less compensation.^[3]

Working in Electrolux before the dismissal

We interviewed seven of the women fired by Electrolux in April 2020. They were 25 to 53 years old, coming mostly from the South but also from neighboring states to Chihuahua. Most of them have children, from small ones to adults. Some of their close family members were either dismissed or still working in Electrolux. These family bonds are important, as they influence the vulnerability of these women workers, especially in the case of single mothers. The experiences were mixed. These women had worked for one to seven years in Electrolux before being dismissed. Most had also worked in other maquilas for up to 20 years before coming to Electrolux. About half of the interviewees said they has liked working there, as the company offered good security and opportunities for promotion. The younger the women, the more positive to the working conditions they were. However, there were also negative experiences that point to heavy work, extremely low or high temperatures (depending on the season of the year), and even work accidents leading to permanent physical damage due to company negligence. As to the salaries, for some of them the salaries were at a good level, but others said they were lower than in other maquilas.

Regarding sexual harassment and discrimination, although these women did not experience it directly, older women workers felt discriminated against compared to young and ‘attractive ones’: the latter got better and easier jobs and quick promotions even if they didn’t have the required skill level. Moreover, young mothers experienced a lack of support regarding care of young children, and there were cases of pregnant women fired just because they asked for leave to address family problems. Many also complained about the lack of support from the company for the night shift regarding transport to their neighbourhoods, something especially serious given the climate of insecurity in Ciudad Juarez. Trade unions and labour organising were considered a non-issue, as these workers considered that such organising was not permitted by the company, and no one dared to speak about it.

The experience of the dismissal

All of these women stated that they attended a meeting called by some workers to inform them of the situation because they were concerned by the lack of measures against Covid, although they were not really involved. They felt shocked when they returned to work after the weekend, only to be called in groups to be notified they had to sign a ‘voluntary resignation’. They had been promised that measures would be taken, and that they would resume their work. They felt trapped and with no alternative other than to sign and get very small compensation and some of their ‘savings’, and although some of them refused to sign, they were later forced to do so, as they needed the money. Afterwards, in December 2020, fewer than half of the interviewed women heard that Electrolux was giving more compensation, but it proved difficult to get because of deficient administration procedures of the company. They also expressed that they had enormous difficulties getting a new job during the pandemic.

This case illustrates the persistence of a problem most assembling industries on the Mexico-US border still confront: the lack of real and representative labour organising. Transnational industries, regardless of their national origin, together with local authorities, block any kind of organisation and cultivate the myth of the inherently corrupt nature of all trade unions so that workers become sceptical of any such organising efforts. Workers are then left to depend on the goodwill of the enterprise and their codes of conduct which, as we see, have no real value in daily realities. This is the case even with companies that have signed global framework agreements such as Electrolux. This agreement may promise to respect workers’ rights, but ‘respect’ obviously does not cover their right to have independent trade unions. Women workers are even more vulnerable to working environments which lack any respect for rules and rights, because of their family situations and the machismo culture among prevalent workers, supervisors and management. This becomes more visible during crisis such as the pandemic, whose consequences for women workers, as we have seen, were even worse than for men.

[1] The minimum salary was 181 Mexican pesos (US$9) in 2019 and 203 pesos (US$10) a day in January 2021, compared to US$7.25 an hour in Texas and US$13 in California (Pérez, 2021).

[2]Their code of conduct commits the company to adhere to the International Bill of Human Rights and International Labour Organisation’s (ILO) Core Conventions, the UN Global Compact, and the OECD Guidelines for Multinational Enterprises.

[3]Industriall is one of the global union federations, and has a global framework agreement with Electrolux. This global framework agreement signed by Electrolux covers workers’ rights all over the world. The pressure from the Swedish unions came through this agreement.

Edmé Domínguez R. is an associate professor (docent) in Peace and Development Studies. Since the 1990s she has been working on gender studies within International Relations, global political economy and democracy. Her area of study is Latin America, specifically Mexico, Central America and Bolivia. She is a founder and presently the president of Gender and Development in Practice, an association in Sweden.

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