Governing Party, Center-Left Opposition Offer Plans for Energy Reform

By Navarro, Carlos | SourceMex Economic News & Analysis on Mexico, August 28, 2013 | Go to article overview

Governing Party, Center-Left Opposition Offer Plans for Energy Reform


Navarro, Carlos, SourceMex Economic News & Analysis on Mexico


The chips are on the table now that the governing Partido Revolucionario Institucional (PRI) and the opposition center-left Partido de la Revolucion Democratica (PRD) have rolled out their proposals to overhaul Mexico's energy sector.

The conservative Partido Accion Nacional (PAN) revealed its plan in July (SourceMex, July 31, 2013).

The three proposals have a common goal--to ensure that any reforms to Mexico's energy sector provide enough revenue to modernize the state-run energy companies, primarily oil company PEMEX, but also the electric utility Comision Federal de Electricidad (CFE). The three parties also share another proposal: a national petroleum fund that would administer future oil and gas profits.

While some common ground exists in the three proposals, the major differences are on how modernization would be funded. The PRI and PAN proposals both support changes to the Mexican Constitution that would encourage and attract private investment, particularly in capital-intensive projects. The PRD's proposal centers on a major overhaul of PEMEX, allowing the company budget and management autonomy.

PRI invokes name of Lazaro Cardenas

An interesting point of contention is the PRI proposal's use of the name of ex-President Lazaro Cardenas del Rio (1934-1940). In presenting the plan crafted by his administration, in consultation with PRI legislators, President Enrique Pena Nieto launched a series of television advertisements prominently featuring photos of Cardenas, who nationalized Mexico's oil industry during his tenure as president. One commercial points out that Cardenas allowed the use of private contracts even after he nationalized the oil industry in 1938. The PRI-sponsored ad goes on to say that the Pena Nieto proposal is simply trying to eliminate a total ban on private participation in key activities like drilling and refining, which were enacted via a constitutional amendment in the early 1960s.

Some analysts said marketing experts from the big corporations, including the broadcast giant Televisa, likely provided assistance in creating the Pena Nieto administration's campaign that used Lazaro Cardenas. "This is not just a case of 'expropriating' the person most responsible for creating our nationalistic state ... but also using him to justify the privatization of Mexico's oil sector," columnist Jenaro Villamil wrote in Agencia de noticias Proceso (apro).

But there was also praise for the strategy. "The genius of the energy-reform proposal unveiled Monday by Mexican President Enrique Pena Nieto is that it taps the country's pride in the oil sector's nationalization to justify reopening the energy industry to private investment," columnist Raul Gallegos wrote in the World View Blog, published by Bloomberg news service. "The trouble with it is that--depending on the fine print--it could alienate the very investors it seeks to attract."

Still, the advertisement angered the PRD, particularly Lazaro Cardenas' son, Cuauhtemoc Cardenas Solorzano, who criticized Pena Nieto and the PRI for misrepresenting his father's intentions. "It is both false and offensive for the government to use the image of Lazaro Cardenas to promote an unpatriotic and traitorous proposal for energy reform among the Mexican people," Cuauhtemoc Cardenas wrote in a front-page opinion piece in the Mexico City daily newspaper La Jornada.

Cuauhtemoc Cardenas, who narrowly lost the disputed 1988 presidential election to ex-President Carlos Salinas de Gortari, was charged with presenting the PRD energy-reform proposal at a rally at the famed Monumento a la Revolucion, which contains his father's tomb. The PRD elder statesman repeated the charges that his father's policy had been misrepresented and accused Pena Nieto of lying to the Mexican people. Cardenas then urged citizens to take every opportunity in a broad range of public forums to oppose the president's plan to make changes to the Constitution that would turn over Mexico's oil patrimony to foreign companies. …

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