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Energy Reform Proposal Announced (Image courtesy from

As the weeks go by the energy reform proposals continue to stir up much debate and activity on the streets of the capital. The breakaway CNTE teacher’s union, a rather unexpected participant, recently popped up on the capital scene, blocking Mexico City’s streets in retaliation for the introduction of an overdue process of teacher evaluation, in the hope of riding the wave of the ongoing protests from certain camps against the energy reform proposals, and drawing their support. The union spectacularly misread the popular mood in the city and did themselves no favours. Such an error of judgment only serves to highlight the fact that it is virtually impossible to gauge the general sentiment of the country vis a vis the reform. And predicting its outcome is akin to watching a Stanley Kubrick film, some would add.

Mexico’s lower house of Congress approved a revised government tax plan that aims to increase revenue by nearly 3 percent of GDP by 2018. However, the bill was revised to cut back plans to apply sales tax to rents, mortgages, property sales and school fees, while raising the top income tax rate on a sliding scale to 35 percent from 30 percent.

Finance Minister Luis Videgaray has estimated the revisions would leave the government with a revenue shortfall of 55.7 billion pesos ($4.4 billion), which the government is expected to seek to plug by raising its oil revenue forecast.

“It is a good move in several directions, for instance I think generalizing sales tax on a national level is crucial,” Agustín Carstens said. “I also think it is a good move because it will ensure spending discipline.”

Other news that hit the headlines this week involved a deal between Pemex and the Export-Import Bank of South Korea, whereby the latter will be extending a USD 2 billion line of credit to finance the NOC’s upcoming projects.

The line of credit is designed to allow Pemex access to financing as well as those companies providing services to the Mexican oil and gas sector, according to an official communiqué. The expectation is that production and productivity will increase thanks to this line of credit, with the aim of reaching the set target of 3.0 million bpd by 2018.

Cuauhtémoc Cárdenas, moral leader of the PRD and son of former president Lázaro Cárdenas, warned the public in a recent conference in Puebla that the energy reform would not be enough to eradicate the pervasive corruption in Pemex and indicated that it would require the political will to force out certain influential heads within the NOC.

He went on to say that he was not against the participation of the private sector in the upstream sector in Mexico, as they are already present to a certain extent, but disapproved of President Peña Nieto’s proposal, which intends to brush aside the involvement of the State.

Elsewhere, Francisco Labastida Ochoa backed the need for reforms in a public statement in the senate this week, although it was a qualified statement.  The former PRI senator and presidential candidate pointed out that the constitutional reform was indispensable but that the secondary legislation that would follow would be of equal importance. He emphasized the importance of running Pemex as a private company and not an extension of the Government. He continued to say that the problem would not solve itself, and that Mexico was in danger of being left behind in the energy revolution that is being led by the USA.


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