The president of the Energy Cluster of Nuevo León, César Cadena, and partner at the law firm Santos Elizondo, Jorge Arrambide agree that the reform to the Judicial Power in Mexico is impacting the arrival of investments in Nuevo León. And Texas, with cheaper energy and fiscal incentives, emerges as a strong rival in the context of nearshoring.
Monterrey, NL. Experts in Energy warn that the possible reform to the Judiciary Power in Mexico is impacting the arrival of investments in Nuevo León. Texas is becoming a potential competitor of Nuevo León for nearshoring, offering cheaper energy and fiscal incentives at the municipal, state, and federal level in the United States.
The president of the Clúster Energético de Nuevo León, César Cadena commented to the press: “We still have to know the result of the elections in the United States. In this business you never underestimate. Now Texas appears, it could be the great enemy of Nuevo León for nearshoring, other types of problems are appearing that we didn’t see three months ago, and they have accumulated due to the reform to the Judicial Power in Mexico.”
Investments are on hold, but how competitive is Texas compared to Nuevo León? “I think the only competition Texas will have is in the cost of electricity and another interesting thing, there are a series of municipal, state, and federal incentives to invest that could turn things around,” he warned.
He deepened that Texas has some disadvantages such as the lack of personnel. However, they could open up temporary imports and this would incline the balance in favor of Texas, because qualified personnel from Nuevo León could go to work with papers.
“We come from a commercial war that will have many facets and the winner will try to take advantage. You sell, you don’t need to be on this side of the border, until the freight you’ll save. And companies that don’t require much labor will be very competitive,” concluded César Cadena, at the end of a monthly meeting with partners of the Clúster.
For his part, Jorge Arrambide Montemayor, senior partner at Santos Elizondo, explained that the price of energy paid in Mexico compared to Texas, “they pay less than half, yes it’s cheaper. Competitively it doesn’t mean they will all go there, no labor force, no other schemes, it’s very regulated, everything needs to be weighed, what is the cost of electricity and what is the cost of not having personnel.”
Uncertainty scenario if the reform is approved
“If the Judiciary Power Reform is approved, it could come a catastrophe, because they could ask for other reforms (lawmakers). This translates into uncertainty. If the reform passes on Wednesday 11th of September and if it also passes in state Congresses, and becomes law, the Constitution will be amended, there will be uncertainty,” emphasized Arrambide.
César Cadena added that in case the reform is approved, for it to be constitutionally valid, some months may pass, and while investment will freeze due to uncertainty and lack of energy policy.
What will the energy policy be?
They are also concerned that with the disappearance of autonomous organisms such as the Comisión Reguladora de Energía (CRE) and the Comisión Nacional de Hidrocarburos (CNH), “the impartiality has ended, the level playing field. Now we will follow a government policy,” on energy decisions.
“From where I’m at now, the problem is that we don’t know what the government’s policy is. I don’t know if private companies, public ones, CFE or Pemex will be in charge. We need to wait for the Secretariat of Energy to make a decision that will be unappealable, whatever Sener and the government decide,” considered César Cadena, president of the Clúster Energético de Nuevo León.
“The problem is that if we don’t define it, we are in the air because we don’t know how they will resolve issues such as energy distribution, gas stations, what they want to do with refining (…) And investments are on hold because there is a fear that things won’t turn out like before, at the end the investor is the first one who gets up and leaves,” concluded the leader.
Source: El Economista
