Mexico’s Energy and Railway Constitutional Reforms Signal Shift in State’s Role in Strategic Sectors

In a decisive move to reassert the role of the Mexican state in the country’s strategic sectors, President Claudia Sheinbaum presented a sweeping constitutional reform package aimed at reshaping Mexico’s energy and railway industries. These reforms, she emphasized, are fundamental to restoring state control over two vital sectors—energy and railways—by reestablishing the primacy of public service over commercial interests.

The reforms seek to reverse key provisions of Mexico’s 2013 constitutional amendments, which opened the energy sector to private players and relegated state-owned enterprises like the Federal Electricity Commission (CFE) and Petróleos Mexicanos (Pemex) to competitive, profit-driven roles. In her presentation, Sheinbaum argued that the 2013 reforms distorted the original purpose of these public companies, turning them into profit-seeking entities instead of public service providers. The new reforms, now under congressional debate, would return these entities to their original mandate of serving the public interest.

Reclaiming Energy Sovereignty

At the heart of Sheinbaum’s energy reform is a bold plan to ensure that the public sector, led by CFE, generates at least 54% of Mexico’s electricity supply, leaving the remaining 46% to the private sector. This marks a significant shift from the 2013 energy reform, which had allowed private companies to take a dominant role in electricity generation. Under the new plan, CFE will once again become the primary player in Mexico’s energy landscape.

Sheinbaum criticized the 2013 reform for treating state-owned enterprises as if they were private companies, subjecting them to commercial laws and profit-maximizing pressures. The 2013 changes, she said, diminished the strategic importance of CFE, placing it on the same competitive footing as private firms and making profitability the central goal. The new proposal seeks to overturn that model, restoring CFE and Pemex to their public service roots, which will allow them to operate under public, rather than commercial, law.

"Eliminating the term 'productive state companies' doesn’t mean we don’t want them to be productive," Sheinbaum clarified. "On the contrary, we aim to remove conditions that have hindered their efficiency and long-term sustainability. The goal is to make them even more productive and efficient than they are now, but within a framework that prioritizes public service, not market competition."

Regulating Private Sector Participation

Although Sheinbaum’s reform would restore state control, she reassured investors and private companies that their involvement in Mexico’s energy sector would continue. The private sector will still generate 46% of the country’s electricity, but under a new regulatory framework aligned with the government’s energy planning goals. Existing contracts with private entities, including self-supply agreements, will be respected, but Sheinbaum hinted that there would be discussions to adjust the terms under which these companies operate.

"The objective is not to fight but to sit down and explain the new rules that will follow the constitutional reform," Sheinbaum stated. "Private companies will continue to participate, but the CFE will once again have a preponderant role in electricity generation, a position it should never have lost."

Luz Elena González, Mexico’s Secretary of Energy, echoed these sentiments, adding that the 2013 reform unfairly privileged private interests, weakening Pemex and CFE. "Profitability became the driving force of the market, which violated the reliability and planning needs of the CFE," González explained. Under the new rules, the government will restore the balance, ensuring that CFE receives proper compensation for transmitting and distributing electricity, an area where it had previously been shortchanged.

Strengthening Mexico’s Energy Independence

These reforms align with the broader energy sovereignty goals set by President Andrés Manuel López Obrador’s administration, which aimed to reduce Mexico’s dependence on foreign energy sources. According to González, Mexico currently produces 90% of the gasoline it consumes, and CFE generates 54% of the country’s electricity needs—figures that reflect a growing emphasis on national self-sufficiency in energy.

A key aspect of López Obrador’s presidency was the review and renegotiation of contracts deemed excessively favorable to private entities, especially those signed in the wake of the 2013 reforms. Although efforts to change these agreements through modifications to secondary laws were struck down by the Supreme Court as unconstitutional, Sheinbaum’s proposed reforms would provide the legal basis for the government to achieve its objectives.

In parallel with the energy reform, Sheinbaum’s government is also pushing through a constitutional amendment to return control of Mexico’s railways to the state, specifically for the operation of passenger trains. While freight lines have been privately operated since the privatization wave of the 1990s, this new initiative seeks to prioritize passenger rail service.

Andrés Lajous, head of the Railway Transport Regulatory Agency, outlined the details of the reform, which has already been approved by the Chamber of Deputies. Lajous explained that while an executive decree under former President López Obrador had opened the door for passenger rail development, this amendment elevates the state’s control of the railways to the constitutional level, ensuring that passenger rail becomes a state priority.

"The operation of passenger rail is now constitutionally recognized as a public priority," Lajous said. The reform allows the state to operate passenger trains directly or through concessions, which could help reconnect many of the country’s communities that have been isolated from rail service for decades.

Austerity-Driven Investments

As part of the railway reform, Sheinbaum announced plans to invest 150 billion pesos ($7.8 billion) in Mexico’s rail infrastructure by 2025, funded entirely through the public budget. In keeping with the government’s commitment to republican austerity, she emphasized that no additional debt would be incurred for this ambitious project.

This injection of public funds is expected to revitalize a sector that has seen little investment since the 1990s, offering improved connectivity across Mexico and addressing the transportation needs of underserved regions.

President Sheinbaum’s sweeping constitutional reforms are set to redefine Mexico’s energy and railway sectors, restoring the state’s role as a key player in both industries. While private enterprise will still have a place in the energy market, the government’s emphasis on public service over profitability signals a major shift from the policies introduced in 2013. The reforms aim to bolster Mexico’s energy independence and rebuild a national railway network that prioritizes public needs.

As these reforms move through Congress, they are expected to spark debate among lawmakers, industry stakeholders, and the public. Whether these changes will ultimately boost productivity and efficiency in Pemex, CFE, and the country’s railways remains to be seen, but one thing is certain—Mexico’s government is reclaiming its role in shaping the future of its strategic industries.