Canacintra, the largest association of industrial companies in Mexico, alerted the Mexican government that in light of the recent power outages throughout the country, a National Working Group must be formed to avoid economic losses and make Mexico attractive for foreign direct investment.
“On May 7, 8 and 9, the National Center for Energy Control (CENACE, the energy regulator in Mexico) has been forced to declare States of Alert and/or States of Emergency”, and “The disconnection of neighborhoods, towns or cities in various states of the Republic has been taken as a measure,” reported the National Chamber of the Processing Industry (Canacintra) in a press release.
Canacintra is made up of 13 industrial sectors in Mexico, such as metalworking, capital goods, food, beverages, automotive, agroindustrial, among others.
More than a month before the arrival of summer (with higher temperatures), several blackouts were carried out this week in several states of the country after several “state of emergency” alerts were declared (electricity generation exceeds only 3.0 percent electrical demand).
The maximum daily demand for electricity is combined with the limitations of the transmission system and the lack of capacity and unavailability in electricity generation in Mexico, Canacintra said.
Separately, the economist and former deputy governor of Banxico, Gerardo Esquivel, said in a publication in the Milenio newspaper that “the national electrical system is in a high degree of vulnerability, subject to enormous pressure”.
It is important to remember that in 2022, under the USMCA, the United States and Canada began an arbitration panel process for Mexico's current energy policy that privileges the state company Compañía Federal de Electricidad (CFE).
The panel was deactivated last February when the highest court in Mexico, the Supreme Court of Justice of the Nation (SCJN) declared the unconstitutionality of the order of priority in the dispatch of electrical energy, regulated in the Electrical Industry Law of 2021, which gives preference to the CFE over private clean energy companies.
According to Canacintra, with the blackouts “the (international) message that is sent is that Mexico has a limitation to satisfy the nation's electrical energy needs. “This puts investment and job creation opportunities at risk.”
In addition, Mexican industrialists called for the creation of a National Working Group that operates transparently to increase the capacity of the electrical system, reduce the limitations of the transmission system and improve the availability of all power plants.
The businessmen proposed carrying out an analysis of electrical demand, with which operating hours could be changed. Canacintra acknowledged that due to the upcoming electoral period in Mexico (June 2) “limiting some types of electricity consumption will be an unpopular measure” warning that “it is necessary to act responsibly in the face of a crisis”.
“We industrialists are prepared to make sacrifices for our Mexico. We need to establish clear leadership in this matter that offers short, medium and long-term solutions that help us overcome this crisis and lead us to a better future,” added Canacintra.
The steel industry is one of the largest consumers of electricity in Mexico.
SteelOrbis requested a comment from the Mexican Chamber of the Iron and Steel Industry (Canacero) by email. However, there was no response.