Mexico Energy: Pena Nietos Reform Proposals: One week On

Mexico Energy: Pena Nieto’s Reform Proposals: One week On

British Embassy Mexico City

August 2013

Summary

One week on, Peña Nieto’s energy reform proposals are in decent shape. A coordinated and disciplined communications campaign has focused on the benefits for Mexican families. Business reactions have been positive, although there are many questions about how the reforms will be implemented.

Detail

President Enrique Peña Nieto’s historic proposals for energy reform have stood up well to a week of intense debate and reaction since he presented them on 12 August   Senior members of the Government have fanned out across the media to explain the proposals, backed by a huge information campaign in print, online and on the airwaves.  The Political Commission of the President’s party, the PRI, gave its strong backing to the proposals.  Polling indicates that nearly three-quarters of Mexicans agree that the state oil company Pemex needs to be reformed.    

 

The parliamentary left, the PRD, presented their alternative proposals for reform on 19 August, focused on modernisation of Pemex and electricity monopoly CFE without constitutional change or an opening to private investment. 

 

Government Reactions

 

The coordination and discipline of the Government’s messaging has been impressive.  It has focused on the headline benefits for ordinary Mexican families of cheaper energy and more jobs.  They have deliberately not been drawn into too much detail on implementation of the reforms, saying that this will be an issue for secondary legislation. 

 

The Government has also taken action to explain the proposals to international audiences.  Foreign Minister Meade (a former Energy Minister) briefed the Diplomatic Corps on 15 August on the historical background, principles and objectives of the proposed reform.  

 

Business Reactions

 

UK energy companies already in Mexico have responded positively. Inevitably, there are questions about how the reforms will be taken forward – for example, about the content of the secondary legislation and the finer details of the proposed “profit-sharing contracts”.  But the Government seem to have done enough – and the opportunities are of a scale – to maintain their interest in future investment. 

 

Media Reactions

 

Media coverage has been intensive, including internationally.  In the Mexican press, initial reactions were varied: with some praising the Government’s bold approach while others criticised a lack of ambition.  More considered reactions have weighed the potential impacts of the Government’s proposals (moderate) against those put forward by the major opposition parties, the PAN (highly liberalised) and PRD (non-liberalised, with a focus on fighting the trade union’s corruption and restructuring Pemex to make it autonomous from political power). Many outlets have recognised that a failed or short-sighted reform could spell the end to Mexico’s aspirations for economic growth (ie. adding up to 3% to current levels of 2.5-3%).

Disclaimer

The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.

Countries: Mexico
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