Mexican President Enrique Peña Nieto proposed new rules yesterday aimed at increasing oil production and boosting the economy.
The proposed legislation includes the creation of eight new laws and the modification of 13 existing laws. Mexican Secretary of Tax, Luis Videgaray, and Secretary of Energy, Pedro Joaquín Coldwell, have said that, with the exception of public gasoline sale, the new rules would open the sale of energy resources to foreign and private firms while keeping them under state control. Videgaray maintained that the laws will reduce Mexico’s high fiscal dependence on oil revenues.
If the rules are approved by Congress, it would end a 75-year monopoly by the state-run oil company Pemex, which was created by the Partido Revolucionario Institucional (Institutional Revolutionary Party—PRI) under President Lázaro Cárdenas in 1938. While giving new businesses the opportunity to invest in Mexican oil, the laws would also lower taxes on Pemex from 79 percent to less than 65 percent. Pemex would also be guaranteed at least a 20 percent stake of business in oil deposits in defined territories.
Political opposition parties, the Partido Acción Nacional (National Action Party—PAN) and the Partido de la Revolución Democrática (Party of the Democratic Revolution—PDR) have both pushed back against the reform. The PAN has made its support of the new rules conditional on the passage of electoral reform that would weaken the PRI’s influence. The PRD is hoping to overturn the proposed reform altogether.
Although the PRI had hoped to push the new rules through Congress on Wednesday, disputes surrounding the details about the reform delayed the process. Congress is not scheduled to convene again until September, but will call additional sessions to try and vote on the rules before the end of June.