The big news in Mexico this week is the debate over energy reform and the privatization of the state run oil giant PEMEX…
Mexico´s president Enrique Peña Nieto proposes Energy Reform amid debate about privatization of Mexico´s petroleum industry
Energy reform and the privatization of Mexico´s oil and gas industry is a controversial issue in Mexico and has been in the national debate for many years. The main point of contention being whether Mexico needs to open up the state run monopolies of energy to private investment to allow much needed funding for upgrades, infrastructure and drilling. Not everyone agrees it is a good idea and many think of it as a selling off of Mexico´s patrimony.
To get a better understanding of the politics at work here, we talked to Playa de Carmen based Attorney and professor, Gustavo Calderon of Calderon & Associates, and he gave us a quick over view of what is going on. He reported that:
On Monday, Mexico´s President Enrique Peña Nieto revealed his Energy Reform plan, that in order to be implemented will require constitutional amendments that would impact the oil and electricity monopolies of Pemex and CFE in Mexico. To give the background … A few weeks ago, PAN, Mexico´s main political party of the right, presented their proposal. The PAN reform proposal was more open (as-is less restrictive) than the current plan being proposed by the President. Peña´s plan is more conservative than the one proposed by PAN, but more liberal than one currently in place.
Professor Calderon feels the reform platform could well be promoted by both parties—the right leaning PAN party, and the central (and ruling party) of Peña Nieto, the PRI… However, there are strong indications that any proposal to reform will cause wide spread public protesting by supporters of Mexico´s leftist party, the PRD, followed by campaigns to reject any proposal conducted by party leaders—mostly of the left. The left party, the PRD, is seriously divided on accepting the necessity of reform, to the extent that some are claiming that there is no need for a reform of the energy monopolies at all.
Former Presidential Candidate Andres Manuel López Obredor, also known as AMLO — who was defeated twice and is now trying to set up his own political party… is thought to be the major instigator of this resistance to energy reform. The following days should be interesting and the news will not likely be following anything besides this story. Debates on this topic are airing on almost every network of the Country.
Whatever the country decides… the economic impact to Mexico will be significant, as almost one third of Mexico’s yearly budget comes from the oil industry, and electricity in Mexico is more expensive than the average around the world and of poor quality.
Most agree modernization in this sector is essential for the growth of Mexico, and money needs to come in to upgrade infrastructure, to improve service, and to increase drilling and exploration. But emotions have been running high on this issue for many years and no one is quite sure how it will all pan out, PEMEX has long been a cash cow for Mexico and many fear losing control of it …
Mexico watchers are looking forward to the dialogue…and the lively debate that will coming in from all sectors in the upcoming weeks. Regardless of what happens in the legislature, the debate is just one more bit of good news south of the border.
