Mexico’s Energy Battlegrounds Come Into Focus, But Rules Of Engagement Remain Undefined

May 5, 2014

634px-Rig_wind_riverForbes, 5/2/14

International investors have been abuzz about the prospect of reforms to Mexico’s energy industry ever since that country’s Congress adopted a constitutional amendment late last year that would bring private investment to the long-closed sector. In the intervening months, attention has focused on a second legislative process: one that will establish the rules and regulations that govern the new energy market. To date, these legislative efforts have given one clear sign of how the reforms will proceed: slowly.

The clock has already run out on the legislative session that was meant to iron out details of the reform process. Congress has given itself more time, declaring an extraordinary session, but the delay itself is telling. It indicates just how much daylight remains between the ruling Institutional Revolutionary Party (PRI) legislators and their main counterparts in the National Action Party (PAN) on key questions of regulatory oversight. The National Hydorcarbons Commission will regulate the oil sector, but sharp disagreements over that organization’s independence and leadership remain unresolved. The extraordinary session cranks up the pressure on lawmakers to come to an agreement, but it also increases the odds of a half-baked regulatory framework that diminishes regulatory stability and allows the politicization of oil sector oversight to persist.

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Mexico Parties in Final Phase of Energy Bill Negotiations

April 29, 2014

MEXICO CONGRESSBloomberg News, 4/24/14

Mexico’s two biggest parties reached agreement on key points of legislation needed to implement an energy overhaul that will end a more than seven-decade state oil monopoly, top party negotiators said.

While the ruling Institutional Revolutionary Party, or PRI, and the National Action Party, or PAN, are working out details, such as how much autonomy regulators will be granted, negotiations are in the “final phase,” said Juan Molinar Horcasitas, who runs the PAN’s political policy body.

David Penchyna, a PRI lawmaker who heads the Senate’s energy committee, said the oil proposal the federal government sends to Congress next week will be welcomed by the opposition as “a very good initiative,” declining to elaborate on contents of the bill. It will be presented before April 30, the last day of Congress’ spring session, he said by telephone.

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Mexico lawmakers see delay in energy reform fine print

April 2, 2014

Mexico BricksReuters, 4/1/14

Top Mexican congressional officials said on Tuesday that the approval of the eagerly-awaited fine print of a landmark energy overhaul will likely be delayed until at least May, meaning Congress would have to call a special session to debate it.

Passed late last year, the constitutional overhaul ended state-owned oil company Pemex’s 75-year monopoly and paves the way for billions of dollars worth of new investments in the country’s lumbering energy sector.

The reform stipulated that lawmakers have until April 20 to approve so-called secondary legislation that fleshes out key commercial and regulatory details of the reform, but Congress appears poised to bust the deadline.

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Mexican Congress approves controversial oil and gas bill

December 13, 2013

BBC News, 12/12/2013

oil rigsThe Mexican Congress has approved controversial legislation that opens the state-controlled oil sector to foreign investment.The new energy law allows private oil and gas companies to drill for oil and gas with the state-run firm Pemex in exchange for a share of the profits. It has been approved by the Chamber of Deputies a day after being passed by the upper house, the Senate.

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Secondary laws for Mexico telecoms overhaul to be delayed -lawmakers

November 25, 2013

Reuters, 11/23/2013

Carlos Slim

Legislation to implement a major overhaul of Mexico’s telecommunications industry will not be approved until early next year, pushing back a deadline set for December, two senior lawmakers said on Saturday.

The secondary laws set out the fine print for a telecoms reform promulgated in June by President Enrique Pena Nieto which gives regulators sweeping powers to rein in billionaire Carlos Slim’s telecoms giant America Movil and dominant broadcaster Televisa.

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Mexico lawmakers accused of demanding kickbacks from municipalities

November 25, 2013

The Los Angeles Times, 11/22/2013

MEXICO CONGRESSSeveral lawmakers and heads of local governance associations recently have begun accusing legislators in the Mexican Congress of also regularly shaking down municipal governments, demanding that they kick back “tithes” of at least 10% if they want infrastructure projects included in federal budget plans. Sometimes the lawmakers allegedly demand that projects be built by specific companies that are run by their cronies.

Though no proof of the practice has emerged, the allegations have plunged Mexico City, the capital, into full scandal mode, with investigations demanded and lawsuits threatened. Former allies have turned on one another.

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Op Ed: Mexico’s critical, fragile compromises

November 15, 2013

The Globe and Mail, 11/15/2013

MEXICO CONGRESSJust about everything except the mouths of politicians seems to the paralyzed in the U.S. political system, especially Congress. Getting one big thing done seems next to impossible.

In Canada, the government can get things through the Commons and Senate, courtesy of its majority in both houses. But negotiate with the opposition parties? Are you crazy?

In Mexico, by contrast, something remarkable and controversial is unfolding. In less than a year, President Enrique Pena Nieto and his party are negotiating with both other parties in Congress on an array of reforms that would leave the legislatures of Canada and the United States breathless.

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Mexico Congress Approves Widest Budget Gap Since 2009 Crisis

November 14, 2013

MEXICO CONGRESSBloomberg, 10/14/2013

Mexico’s Congress authorized the widest budget gap in four years as President Enrique Pena Nieto seeks to boost growth in Latin America’s second-biggest economy from the slowest pace since the 2009 recession.

The lower house approved early this morning the 2014 spending plan of the budget, which calls for 4.47 trillion pesos ($343 billion) in outlays. Next year’s budget, which forecasts a deficit of 1.5 percent of gross domestic product, now goes to Pena Nieto for signing. The 2014 gap compares with a 0.4 percent deficit planned by the government for this year.

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Mexico nears electoral reform, opening door to energy bill

November 13, 2013

Reuters, 11/12/2013

Enrique PeñaNieto 2Accused a generation ago of engineering the “perfect dictatorship,” Mexico’s ruling party is now close to agreeing on a plan that could weaken the presidency and strengthen Congress in order to win votes for a major energy reform. The Institutional Revolutionary Party (PRI) and its opposition rivals are shortly expected to unveil the blueprint for a reform aimed at giving Congress greater oversight of government and allowing lawmakers to serve consecutive terms.

Billed as a step forward for democracy, the electoral reform is a bargaining chip for President Enrique Pena Nieto’s most ambitious plan – changing the constitution to allow more private capital into the state-controlled oil industry.

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Mexico has scope for further fiscal reform -S&P

November 8, 2013

Reuters, 11/7/2013

luis videgarayMexico has room for further fiscal reform to improve its tax base because a bill passed by Congress last week still leaves it well behind countries with stronger revenues, credit ratings agency Standard & Poor’s said on Thursday. Mexico’s Congress approved a package of measures last week, including higher taxes for the rich and levies on junk food and stock market gains in a bid to increase the country’s paltry tax take, one of the weakest in the Americas.

Before the tax reform was presented in September, senior officials in President Enrique Pena Nieto’s Institutional Revolutionary Party (PRI) said the aim was to boost revenues by four percent of gross domestic product. But the bill that was eventually floated was less ambitious. And the reform approved is only expected to up the take by around 2.5 percent of GDP by 2018, the finance ministry said.

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