Pena Nieto’s Mexico Energy Reform Faces Delay in PAN Shakeup

Mexico President Enrique Pena Nieto’s reform agenda that includes legislation to end the monopoly of state-owned Petroleos Mexicanos faces delays due to a shake-up in the former ruling party’s leadership.

Former President Felipe Calderon’s National Action Party, or PAN, yesterday ousted former Finance Minister Ernesto Cordero from the Senate party leadership. The decision erodes the political consensus parties have built in congress, complicating the economic reform agenda, according to IdeaGlobal and Javier Oliva, a political scientist at Mexico’s National Autonomous University.

“What may happen is that factions of the party would vote against part of an energy reform,” Oliva said in a telephone interview from Cuernavaca, outside Mexico City. “It may slow down the reform’s approval process.”

Pena Nieto has pledged to double the pace of economic growth by passing reforms to open up the state-owned oil company to private investment, boost tax revenue and spur competition in sectors like telecommunications. A multiparty accord, led by Pena Nieto’s Institutional Revolutionary Party, or PRI, and PAN that has sped up passage of reforms in Congress and that recently resolved differences over vote buying allegations now faces a divided PAN in the Senate, where it’s the second-largest party.

Cordero, who will remain president of the Senate, confirmed yesterday that 24 of 37 PAN senators wrote a letter backing his leadership in the Senate.

Internal Division

The party’s internal divisions stem from differences over its role as an opposition presence after losing the presidency it held for 12 years in 2012, including how it should operate within the Pact for Mexico political accord to pass economic reforms.

Earlier this month the PAN resumed its activity within the pact after suspending it in April on accusations the PRI used government funds to buy votes ahead of July 7 local elections.

“The PAN can’t be a satellite of the PRI,” Cordero told reporters yesterday. “I’m worried that the PAN is losing its independence to the government.”

PAN President Gustavo Madero countered that Cordero has been acting without consulting party leadership, such as presenting a campaign finance bill a day after Madero had announced one.

Under Cordero’s leadership, PAN senators have pushed through changes to a telecommunications reform approved in April, allowing companies to gain temporary injunctions during trials. The senators also strengthened oversight of unions in a labor law passed in November.

“The outlook on reform has become somewhat more challenging and that in turn overflows into the investment decision process,” said Enrique Alvarez, the head of Latin America for fixed income at research company IdeaGlobal. “If there’s infighting, if there are more visible divisions and a sort of questionable desire to work in unison going forward, I think that’s going to complicate the investment” outlook.

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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