Mexico's energy reform marches on

July 22, 2014

Mexico’s senate passed the secondary legislation that defines new institutional framework for state oil company Petróleos Mexicanos (Pemex) following the December 2013's sweeping energy reforms.

After 12 hours of debate and hearing from more than 50 senators, three of the four bills were approved on 20 July. The fourth and final bill was approved the next day, 21 July.

The bills will now pass to the lower house of Congress for legislative review, with final congressional approval needed before proceeding to the desk of Mexico President Enrique Peña Nieto.

The new legislation“seeks to modernize, update, strengthen and transform Pemex and CFE into productive state companies, exclusive property of the federal government, in order to be competitive in their respective markets,” the Senate said.

The adopted laws will regulate the “organization, administration, operation, monitoring, evaluation and accountability” of state-owned companies Pemex and the country’s national electricity commission, or CFE. Multiple articles and laws were changed in both monopolies’ governing by-laws.

In what was more than likely a direct response to the backlash from the left-leaning Party of the Democratic Revolution (PRD), the Senate said that changes made only effected the legal natures of the companies, and “shall not affect in any way the rights of active workers or retired workers.”

The Energy and Legislative Studies Committee began a special session on 17 July, after the first law in the set of four was passed 15 July. Tussling between the ruling Institutional Revolutionary Party (PRI) and the PRD initially kept the secondary laws from passing in June as originally planned. One of the issues at the heart of the debates were local content laws: the agreed-upon number will be 25%. Peña Nieto, a member of PRI (or Priista), was the first of his party to hold the top elected official position in 12 years.

Peña Nieto kicked off massive reforms to the country’s beleaguered oil, gas and power industries in December 2013, aimed to end the country’s 75-year-old state monopoly, open them up to partnerships with the private sector, and reverse their fading profit margins. The new transparency, budgetary and tax laws passed in the secondary legislation gives Pemex more fiscal autonomy, in addition to allowing the oil giant to partner with companies in the private sector.

The Senate’s Chairman of the Energy Committee, David Penchyna Grub (PRI- Pachuca, Hidalgo), said that “good times will come to Mexico, thanks to this reform.” He also said that the transparency will strengthen the companies.

Image of Senator David Penchyna Grub shown speaking during the bills' special session from the Mexican Senate. 

Read more on Mexico's energy reform:

PEMEX to invest billions in Cantarell

Mexico's energy reform: challenges and opportunities

High hopes for growth

Mexican Congress passes energy bill

Mexico energy reform seeks to make history by repeating it



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