Mexican Oil Bill Has Better Chance to Pass, Opposition Says
Mexico has a “better than ever” chance of passing a bill this year to break a seven-decade state monopoly on oil drilling, said the spokesman for an opposition party needed to gain the reform’s approval.
Talks are advancing in congress to pass electoral changes that the opposition National Action Party, or PAN, says are essential for it to back the energy overhaul, PAN spokesman Juan Molinar Horcasitas said in a phone interview. There’s a “good chance” the PAN and ruling Institutional Revolutionary Party will reach common ground on specifics of the oil bill, Molinar said.
President Enrique Pena Nieto is betting on an energy overhaul to attract companies such as Exxon Mobil Corp. (XOM) to Mexico, saying new investments will lift economic growth 1 percentage point by 2018. Latin America’s second-largest economy is growing below the regional average, with economic expansion forecast to slow this year to one-third the pace of 2012. The energy bill, along with the electoral legislation, known as political reform, is being debated before the Senate.
“Congress is doing a good job and we’ll soon have a draft ready for a vote” of the political reform, Molinar said. “If the political reform passes, the energy reform passes. If not, bye bye energy.”
Allowing companies to explore and drill in Mexico requires a constitutional amendment that could only pass with a two-thirds majority in both the lower house and Senate.
The PAN, along with the Institutional Revolutionary Party and its allies, have enough votes to approve a charter change. The third-largest party, the Democratic Revolution Party, has said it’s against the energy reform.
The comments from the PAN helped strengthen Mexico’s peso today, according to Marco Oviedo, chief Mexico economist for Barclays Plc, who said they boosted chances the reform will pass.
The peso rose 1.2 percent today to 12.8414 per dollar, strengthening further after Molinar’s comments.
“The PAN is the pivotal party for the energy reform to be approved,” Oviedo said in an e-mailed response to questions. “This helps keep peso assets as the preferred choice.”
Pena Nieto presented his oil plan Aug. 12 that offers profit-sharing contracts to private companies in efforts to stem eight years of declining oil output. The PAN presented a bill that goes further by offering companies concessions to drill in Mexico.
The economy will grow 1.2 percent this year after expanding 3.9 percent last year, according to a survey of analysts published today by Citigroup Inc.’s Banamex unit.
The PAN will seek to ensure the oil overhaul is closer to its own proposal than to Pena Nieto’s, which isn’t sufficient, Molinar said. It will also require clauses in the amendment that indicate what secondary energy bills would include, as had been done in a previous reform to overhaul the telecommunications sector, Molinar said.
The PAN’s political reform aims to increase transparency in Mexico’s voting process by allowing re-election of mayors and legislators and run-off races, among other measures.
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