Saturday, December 14, 2013

México: Congress Approves Bill to Privatize Energy Sector

According to The Latin American Tribune, México’s Congress on Thursday (December 12) gave full approval to a bill to open up the energy sector to private investment and end state oil company Petroleos Mexicanos’ 75-year monopoly, despite staunch opposition from leftist lawmakers.

The lower house, known as the Chamber of Deputies, passed the legislation, which is the cornerstone of President Enrique Peña Nieto’s reform efforts, in general by a vote of 354-134 at 1308 hours, roughly 36 hours after the Senate gave the green light to the overhaul.

The Chamber of Deputies gave its initial overall green light to the bill late Wednesday (December 11), but the marathon session continued Thursday with the rejection of dozens of minority-party challenges to individual sections of the bill.

The bill sought to modify three articles of Mexico’s constitution, Articles 25, 27 and 28; the the bill needed to pass by a two-thirds majority in both the Chamber and the Senate of Congress.

COMMENT: The bill must also be ratified by a majority of the country’s 32 state legislatures, most of which are controlled by the governing Institutional Revolutionary Party (PRI) and the National Action Party (PAN), both of which were the main backers of the bill.

Voting by the state assemblies should take place early next year.

Proponents say it is necessary to attract major multinational energy companies to develop promising deep-water reserves in the Gulf of Mexico.

Opponents of the overhaul have expressed support for modernizing Pemex and the energy industry, but reject constitutional changes they assert would hand the nation’s resource wealth over to private investors.

Supporters want a popular referendum on the energy overhaul to be held in 2015.

Under the initiative, Pemex reserves the right to develop the most profitable fields, while private companies could enter into profit and production-sharing contracts with the government in less accessible areas, including technically challenging, deep-water areas of the Gulf.

Since taking office a year ago, Peña Nieto has also pushed through major changes to the education and telecommunications sectors, as well as a tax overhaul aimed at reducing the federal administration’s dependence on Pemex, which accounts for roughly a third of government revenue.