Cenace Agreement

Despite these commitments, President Andres Manuel Lopez Obrador is determined to revive pemex, the public oil group, and increase the country`s oil production. Mexican Energy Minister Rocio Nahle was recently attacked as the only representative who refused to sign an agreement with the Organization of the Petroleum Exporting Countries (OPEC) to reduce global oil production by 10 million barrels per day. These provisions are unclear and require an explanation of the extent of the suspension and cancellation, which further describes the tests and the applicable period. Understanding the measure is relevant because it can, among other things, lead to a delay in the commercial operation of wind and solar power plants and, consequently, possible power failures in the respective production authorization, interconnection contract, electrical processing contract and financing documents. In accordance with this agreement, the intermittency of wind and solar installations influences the reliability, quality and continuity of the National Electric System. As a result, since May 3, 2020, pre-operative testing of wind and solar installations has been suspended. According to the recommendations of the Federal Economic Competition Commission of Mexico (Comisién Federal de econémica or COFECE), the measures mentioned in the CENACE agreement could be contrary to free competition and increase electricity prices. It is not clear how and when these measures will be applicable. In addition, it creates uncertainty about the production of electricity from wind turbines and solar installations, which are currently in service and generally cost less than conventional power plants.

[1] Luis Pazos, „Santa Luca o Texcoco. Pérdidas y Ganancias, Centro de Investigaciones Sobre la Libre Empresa, Sept. 2020, at 12. [2] Revista Expansién, „El Gobierno de AMLO cancela la cuarta subasta eléctrica,” Revista Expansién, February 1, 2019. [3] Arturo Solis, „El gobierno de AMLO cancela subastas petroleras pendientes,” Forbes México, December 11, 2018. [4] Jude Webber, „Pipelines Disputes to Mexico Investment Fears,” FIN. Times, July 16, 2019. Jude Webber, „Mexico Reaches Deal to settle Pipeline Contracts Dispute,” FIN. TIMES, 27.8.2019. [5] President Lepez Obrador was quoted as saying: „Instead of making claims against the government for its actions, private energy companies should ask the government for forgiveness.” Pedro Villa y Cana, „En vez de demandar por energéas limpias, IP deber`a pedir exculpas: AMLO,” El Universal, 18 May 2020.

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