This reform originates from the initiative with a draft decree amending Articles 25, 27, and 28 of the Political Constitution of the United Mexican States, concerning strategic areas and State companies, presented by the former President of Mexico on February 5, 2024.

On October 9, 2024, the plenary session of the Chamber of Deputies approved the decree by a qualified majority of 353 votes in favor, 122 against, and no abstentions.

Subsequently, on October 17, 2024, the Senate of the Republic approved the reform amending Articles 25, 27, and 28 of the Political Constitution of the United Mexican States to modify the legal nature of state-owned companies in the energy sector, with 86 votes in favor, 39 against, and one abstention. By virtue of the foregoing, the reform reached the qualified majority required for its approval.

After approval of this constitutional reform by the local legislatures, on October 25, 2024, the president of the Board of Senators, Senator Gerardo Fernández Noroña, declared the constitutionality of the decree reforming Articles 25, 27, and 28 of the Political Constitution of the United Mexican States.

Finally, on October 31, 2024, the decree amending the fifth paragraph of Article 25, the sixth and seventh paragraphs of Article 27, and the fourth paragraph of Article 28 of the Political Constitution of the United Mexican States, regarding strategic areas and State companies, was published in the Official Gazette of the Federation.

The reform contains the following essential elements:

• Modification of the legal nature of State companies in the energy sector. The term “productive companies of the State” is replaced by “public companies of the State,” returning the public character to PEMEX and the Federal Electricity Commission (CFE).

• Addition of strategic areas of the State. The State’s control over Internet service provision and lithium management will not be considered a monopoly.

• Objectives of the National Electric System are established. The constitutional text now includes the aims to preserve national energy security and self-sufficiency, and to provide electricity at the lowest possible price, avoiding profit in this sector.

• Prohibition on granting lithium concessions. Granting of lithium concessions is prohibited, with the understanding that the management and exploitation of this resource will be a strategic area of the State.

• Prevalence and priority of state-owned public companies in secondary legislation. Secondary laws that regulate individual participation in electrical industry activities must not take precedence over the State public company, whose essence is to fulfill its social responsibility and guarantee the continuity and accessibility of public electricity service.

The reform is ambiguous in its wording and content, as it lacks precise or exhaustive guidelines regarding the implementation of the modified legal nature of the State’s strategic companies in the energy sector; nor does it establish clear guidelines for congruence and development of secondary legislation on the matter.

The decree entered into force the day after its publication in the Official Gazette of the Federation, granting the Congress of the Union a period of 180 calendar days from its entry into effect to make the necessary adjustments to the corresponding secondary laws.