The elections have come and gone and the outcome is as predicted. Although the official electoral results are not announced until Wednesday July 4th by the Federal Electoral Institute, both the preliminary results and most exit polls point to Enrique Peña Nieto as the new President of Mexico. If this is the case, the energy sector can expect several changes in the coming years.
During his campaign, the PRI’s candidate sketched out several proposals for the energy industry with regard to his intended political strategy for the oil, gas and electricity sectors.
In line with Peña Nieto’s proposals, here is what we can expect the government to do for Mexico’s energy sector in the next six years:
- Make the existing infrastructure in the sector more efficient by reducing the CFE’s excess capacity.
- Promote the utilization of cheaper primary energetics such as water, gas, biomass, the subtropical sun and geothermal vapor, instead of fossil fuels.
- Call for technological renovation in power supply.
- Encourage energy generation from renewable energy sources along with their respective transmission networks.
- Propel energetic auto-generation and cogeneration schemes for the industrial sector.
- Promote energy saving and energy efficiency schemes and reduce energy demand for better environmental care
- Create more intelligent subsidies for fuels derived from oil and reduce the productions costs in the oil and gas sector.
- Modernize Pemex’s administration and operation in order to make it more efficient and competitive.
- Expand the participation of the private sector in Pemex, maintaining public ownership of the country’s hydrocarbon reserves and control of the state to boost production, profitability and transparency.
- Follow in the steps of the Brazilian oil company, Petrobras, whose main responsibility is the exploitation of the country’s hydrocarbons.
- After both economic and territorial growth, plan the potential entrance of Pemex into the stock market.
With regard to welcoming private investment in the oil and gas sector, Peña Nieto is confident that it is what Mexico needs to propel economic growth:
“Pemex needs to benefit from associating with the private sector in order to make its production more dynamic and increase its profitability and transparency. We need to attract national and international private capital with regard to Exploration and Production where we can undertake more risk than is currently allowed. With regard to Refining, we also need to allow private investment. The formula for success consists in achieving a political consensus to achieve the ‘optimum mix’ between governmental action and private action within Pemex.”
The results of Mexico’s 2012 elections denote a great change for Mexico now that the country is going back to the political party that most citizens claim ruled practically dictatorially for 71 years. Mario Vargas Llosa, the famed Peruvian novelist, called the PRI the “perfect dictatorship”. While PRI supporters rejoice at Peña Nieto’s presidential victory, the rest of the population must accept the change in political government before December 1st when Mexico’s new candidate will formally take the reins.
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