Legislators for Center-Right P.a.N. Abandon Plans to Seek Constitutional Changes to Reform Electricity Sector

SourceMex Economic News & Analysis on Mexico, June 5, 2002 | Go to article overview

Legislators for Center-Right P.a.N. Abandon Plans to Seek Constitutional Changes to Reform Electricity Sector


Legislative leaders from the pro-business Partido Accion Nacional (PAN) have set aside efforts to push for constitutional changes that would open the electrical-power sector to private investors. The decision was reached during a meeting between legislators Felipe Calderon Hinojosa and Diego Fernandez de Cevallos and two key members of President Vicente Fox's Cabinet, Energy Secretary Ernesto Martens Rebolledo and Interior Secretary Santiago Creel Miranda.

The PAN decision is based on strong opposition from all other parties to constitutional changes. Instead, the center- right party decided to work closely with other parties to reach a compromise on an initiative to reform the electrical- power sector through existing legislative avenues. The electricity-reform initiative will probably be considered at a special legislative session, expected sometime in July.

"The PRD and the PRI have developed some proposals that would encourage the participation of private capital in the electrical-power sector without the need for constitutional reform," said PAN Sen. Juan Jose Rodriguez Pratts, chair of the energy committee (Comision de Energia) in the upper house.

Congress prepares to discuss electricity reforms

The Senate has already taken some preliminary steps that would eventually lead to a full discussion of electricity reforms. In late May, members of the Senate's energy committee and the constitutional issues committee (Comision de Puntos Constitucionales) created four working groups to analyze several aspects of electricity privatization. The committees plan to hear testimony from government officials and international experts, including representatives from the World Bank and the UN's Economic Commission on Latin America and the Caribbean (ECLAC).

In the Chamber of Deputies, the coordinators of the four major political parties met to lay the groundwork for future discussions. "We basically drafted a list of 30 relevant issues that will serve as a basis for future meetings," said PAN Deputy Calderon Hinojosa, who met with counterparts Marti Batres of the PRD, Beatriz Paredes of the PRI, and Bernardo de la Garza of the Partido Verde Ecologista Mexicano (PVEM).

Calderon said legislators will take whatever time is necessary to develop legislation, even if this means foregoing a special session in July and holding the full discussion during the next ordinary session that begins Sept. 1.

"I believe we can make great advances without seeking confrontations on the constitutional question," said Calderon.

Still, debate over electricity reforms is expected to be heated because of party differences on whether any further private investment should be allowed in the electrical-power sector even without constitutional reforms. Many PRD members oppose any new openings to private investors.

"This is a strategic sector for our country," said PRD Deputy Rosario Tapia. "Therefore, we must not allow any more private capital than is currently permitted."

The PAN and supporters in other parties argue that the government does not have the financial resources to construct the necessary infrastructure to meet growing energy needs.

Energy Secretary Martens said the Fox administration has drafted several initiatives for electricity reform, some that assume constitutional changes and others that work within the existing legal framework.

"Our Congress is clear it does not want to consider an electricity reform that involves changing the Constitution. We will look for solutions, within the limits [Congress] has set, to guarantee that Mexico has energy," Martens told reporters.

The PAN position is supported by the private sector. In a recent report, Grupo Financiero BBVA-Bancomer projected a 6% annual growth in Mexico's demand for energy, which would require investments of US$31 million.

Some business leaders like Javier Prieto, president of the Confederacion de Camaras Industriales (CONCAMIN), have proposed that the government boost the electricity sector by creating private-public partnerships.

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