UPDATE 1-Mexico leftists exit pact, may boost case for energy reform

Thu Nov 28, 2013 3:54pm EST

By Ana Isabel Martinez

MEXICO CITY Nov 28 (Reuters) - The head of Mexico's main leftist party said on Thursday it had pulled out of a cross-party pact on economic reform, which could push the government toward a more radical plan to spur investment in the oil industry wanted by conservatives.

Such a move could herald more intense opposition in the street to President Enrique Pena Nieto's plans to open up the state-run energy industry to greater private investment.

Party of the Democratic Revolution Chairman Jesus Zambrano said the PRD was being left out of talks over the energy overhaul, and would leave the pact definitively unless the situation changed.

"We are out," Zambrano said. "If they don't correct this, there is no point."

Mexico's peso extended gains following the announcement.

The energy bill is the cornerstone of a broader drive for change from telecoms to education that Pena Nieto hopes will help boost Mexico's economic growth, which has long lagged that of other countries in the region.

Pena Nieto's Institutional Revolutionary Party (PRI) lacks a majority in Congress, which pushed the president to establish a pact with the PRD and the conservative National Action Party (PAN) after he took office in December 2012.

Under the pact, lawmakers have already passed major education, telecommunications, tax reforms as well as a financial reform bill this week. The last main reform is a bill to open the state-run energy industry to more private investment. A planned electoral reform is also pending.

The PRD has balked at changing the country's constitution to enshrine a greater role for private investment. Analysts have expected that Pena Nieto could move an energy proposal he introduced in August closer to the PAN'S bill, which calls for allowing private companies concessions to drill for oil.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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