Mexico Opposition Rebuffs Pena Nieto Pemex Changes With New Plan

A key Mexican opposition party unveiled its counter proposal to President Enrique Pena Nieto’s plan to modernize state-owned oil company Petroleos Mexicanos, rejecting changes to the constitution to attract private investment.

The bill seeks to reduce the tax burden on Pemex, as the oil company is known, and allow the company to decide its budget, party founder Cuauhtemoc Cardenas, whose father nationalized oil in 1938, said today in Mexico City. The proposal also seeks to boost the company’s refining capacity, increase the strength of regulators and gradually decrease the amount of oil that Mexico exports, Cardenas said.

The legislation would not allow profit-sharing contracts that Pena Nieto said are needed to attract private investment. Those contracts would end the oil company’s 75-year monopoly on production. The PRD, as the opposition party is known, will poll the public on energy reform this month, while Andres Manuel Lopez Obrador, the PRD’s 2012 presidential candidate, who has since left the party, called for protests in September.

The government’s amendment proposals “are attempts against the sovereignty” of Mexico, Cardenas said as he presented the legislation. The government-backed bills “have a clear objective to displace the Mexican government of its control and management over its oil wealth and with it its economic independence.”

The PRD has 101 seats of 500 in the lower house, and along with groups that have allied previously with the party, it has a total of 135 seats. Pena Nieto needs a two-thirds majority of the lower house to see his legislation passed.

The peso weakened 1.2 percent to 13.0660 per dollar at 2:34 p.m. in Mexico City, the worst performance of 23 major emerging market currencies tracked by Bloomberg after the Indian rupee.

Cardenas called on the president to withdraw his oil reform proposal in a Radio Formula interview earlier today. Pena Nieto’s energy bill poses a risk for the nation because it removes control from the state, he said.

Instead, the party is proposing a gradual five-year change to the “enormous” tax load on Pemex, he said.

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