Emilia Esther Calleja, an electrical engineer with over two decades of experience at the state utility, will be the new CEO of Mexico’s Comisión Federal de Electricidad (CFE).
CFE, the main player in Mexico’s natural gas market and holder of a majority of the nation’s pipeline capacity, will now for the first time be helmed by a woman. Mexico will also have its first female president come October in President-elect Claudia Sheinbaum. The energy ministry Sener, meanwhile, will be led by Luz Elena González.
On LinkedIn, Mexico electricity and natural gas expert Rosanety Barrios expressed enthusiasm that so many women were gaining leading positions in the nation’s energy sector, one that has traditionally been dominated by men.
Mexico City-based energy consultant Gonzalo Monroy told NGI’s Mexico GPI that the new CFE CEO is “solid technically.” He added that Calleja would likely continue the same managerial vision of outgoing CFE head Manuel Bartlett, but “with less fanfare.” He added that Calleja had little experience in the natural gas market.
According to Monroy, it remains likely that Miguel Reyes would continue to helm CFE’s highly profitable gas marketing arms, CFE International LLC (CFEi) and CFEnergía (CFEn).
Overall, analysts view the incoming team picked by Sheinbaum as one of expertise and academic credentials. Sheinbaum has also been seen as open and willing to engage with the private sector.
Challenges Abound
Challenges for the new leaders of Mexico’s energy sector, however, will be numerous.
Mexico’s power demand is growing faster than forecast, and its infrastructure is falling behind. Meanwhile, regulatory changes and a general political environment that has been seen as antagonistic towards the private sector has stunted overall investment.
“Significant investment is required, with private sector participation being crucial for the development of new power stations, ensuring the financial structure” of CFE, analysts at Fitch Ratings said recently.
Meanwhile, Mexico’s outgoing president Andrés Manuel López Obrador could still push through a regulatory overhaul of the energy sector before Sheinbaum is sworn in this October.
On Sept. 1, López Obrador’s Morena party will take on a supermajority in the house of representatives and a simple majority in the senate. This would give Morena sweeping powers to make constitutional changes.
Among these are an overhaul of how justices to the supreme court are elected. The outgoing president is seeking preferential treatment for CFE and state oil firm Petróleos Mexicanos (Pemex).
López Obrador “is working intensely to undertake a profound overhaul of the constitution a month before his departure,” energy expert and former deputy secretary of energy for hydrocarbons in Mexico, Lourdes Melgar, told NGI’s Mexico GPI.
“The proposed reforms would not only redefine the organizational design of governance and the rule of law in Mexico, but also mark a significant setback in terms of democracy, accountability, transparency, and economic competitiveness, a situation of grave concern.”
She cited the proposed move to eliminate energy sector regulators Comisión Nacional de Hidrocarburos (CNH) and Comisión Reguladora de Energía (CRE). The outgoing president also wants to scrap competition watchdog Cofece.
“These are key institutions that ensure the operation of the electricity and the downstream market and transparent and clear regulations of private investors and state-owned companies,” Melgar said.
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The fragile state of the power system was made clear earlier this year. Throughout early May, Mexico experienced a nationwide heatwave that drove a surge in electricity demand across the country.
The electric grid was unable to support the increased demand, leading the national power system operator, known as Cenace, to issue critical alerts for inadequate supply on 11 of the first 18 days of the month. The grid’s inability to meet national power needs led to blackouts in 21 of Mexico’s 32 states on May 7.
The natural gas system held up during the heatwave, but a lack of sufficient power generation supply crippled the electric grid.
The Baker Institute for Public Policy’s David Gantz recently said that, “In a country where foreign direct investment has been discouraged by nearly six years of López Obrador’s efforts to roll back the 2013 energy sector reforms and reestablish virtually complete state monopolies for Pemex and the CFE, the result has been increasing investor uncertainty and looming electric power shortages.”
He added, “This uncertainty would be further exacerbated – and the rule of law further eroded – if the proposed judicial reforms…are implemented.”
