Constitutional Reform on Strategic Sectors and State-Owned Companies: New Rules for Energy, Lithium and Internet Services

On October 17, Mexico´s Congress approved a constitutional reform that amends Articles 25, 27, and 28 to introduce new regulations concerning energy, public strategic sectors, state-owned companies, and state-providedInternet services. Below are the key components of this reform and its potential implications. 

1. New Energy Regulation: A Shift Toward State Control 

The approved reform significantly changes how Mexico regulates state-owned economic activities. Economic public entities previously known as “productive state-owned companies” will now be classified as “public state-owned companies.” This change directly impacts Mexico´s largest state-owned energy companies: the oil producer PEMEX and the Federal Electricity Commission (CFE). Under the new framework, both companies will face greater state oversight as Mexico seeks to increase government control over energy resources. 

In particular, the reform removes the priority previously given to private companies in the electricity sector, ensuring that public entities like CFE take the lead in shaping Mexico's energy transition. This includes steering the country’s transition toward renewable energy and promoting energy security and self-sufficiency. The state will now have the legal faculty to sustainably use all energy resources available to the nation to reduce greenhouse gas emissions. 

Additionally, the constitutional reform sets ambitious new goals for Mexico’s national electricity system, including ensuring energy security and self-sufficiency while aiming to provide electricity at the lowest possible cost for consumers. The state-owned Federal Electricity Commission (CFE) will be tasked with achieving these objectives, prioritizing national energy security over profitability. However, it remains to be seen whether the goal of minimizing electricity costs is feasible. Electricity pricing depends on various factors—including production costs, the energy source, infrastructure, and investments in renewable energy—which may conflict with efforts to keep costs low. 

2. Lithium Regulation: The State Takes Control 

Lithium is now officially designated as one of Mexico’s strategic sectors, a category of industries deemed critical for national development and reserved for exclusive state control. With this reform, the government will manage all activities related to lithium extraction, processing, and commercialization directly. 

While this move strengthens the state's control over this valuable resource—essential for batteries and other high-tech industries—it also ensures that these activities will not be deemed monopolistic. This could significantly impact domestic and international stakeholders involved in lithium-related ventures in Mexico, as private companies may face more stringent regulatory frameworks. 

3. Internet Services: Expanding State Oversight 

Similar to lithium, internet services are now classified as a strategic sector. The reform allows the Mexican government to expand its role in providing and regulating internet access nationwide. This classification paves the way for future regulatory changes that could result in greater state involvement in the telecom sector. 

By recognizing internet services as a strategic national interest, the reform aligns with broader efforts to ensure equitable access to communication technologies while enhancing public control over essential infrastructure. However, this move could raise concerns among private telecom providers and international investors. By designating internet services as a strategic sector in the Constitution, the reform paves the way for potential amendments to secondary legislation, which could grant the government broader authority to regulate and oversee the industry, increasing state control and potentially limiting private sector involvement. 

4. New Strategic Sectors and Policy Change 

Article 28 of the Constitution already encompasses several strategic sectors, including nuclear energy, the national electricity system, and radioactive minerals. Such constitutional provisions have historically been used to regulate private-sector participation and strengthen public strategic planning. The reform adds lithium and internet services to these sectors, extending state authority to shape policies. 

4. Broader Impact on Strategic Sectors and Policy Shifts 

Article 28 of the Mexican Constitution already designates critical sectors—such as nuclear energy, the electricity grid, and radioactive minerals—as strategic for national development. The recent reform expands this list to include lithium and internet services, further consolidating the state's ability to regulate these industries and shape policy decisions. 

This shift reflects President Claudia Sheinbaum´s vision of increasing state control over critical industries and ensuring that national resources and infrastructure align with Mexico’s long-term economic and environmental goals. 

Implications for Investors and Companies 

This constitutional reform represents a significant shift in Mexico’s regulatory environment. While its emphasis on energy security, sustainability, and the protection of national resources may open new opportunities in sectors like renewable energy, energy storage, and telecommunications, it also brings increased regulatory uncertainty. The reform underscores Mexico’s commitment to strengthening state control over critical industries, which could affect private-sector involvement in energy and telecom. Companies with operations or investments in these sectors will need to closely monitor ongoing legal and policy developments as the full impact of the reform unfolds.