MEXICO CITY (Reuters) - Mexican President Enrique Pena Nieto said on Thursday his sweeping energy reform, which is expected to include constitutional changes to lure private investment and boost output, will be presented to Congress next week.
The energy reform is a key plank of a wider economic overhaul designed to boost growth in Latin America’s No. 2 economy to 6 percent a year, create jobs and lower energy costs.
“The government will be presenting my initiative, the initiative of the government, in the coming days, I think next week,” Pena Nieto told local radio from a hospital where is recovering from the surgical removal of a benign nodule on his thyroid gland. He gave no details about the bill.
A top lawmaker from Pena Nieto’s ruling Institutional Revolutionary Party, or PRI, said on Wednesday he expected the reform to be presented on August 7.
Pena Nieto said he hoped the initiative would be debated by Congress during a special legislative period set to begin in mid-August, setting up what is likely to be a heated debate over the future of Mexico’s oil riches.
Mexico’s conservative National Action Party, or PAN, proposed its own aggressive energy reform on Wednesday, which would dismantle the current ban on concessions and risk-sharing contracts in addition to a broad opening of the electricity sector and the creation of a fund to administer Mexico’s oil wealth.
Mexico is the world’s 10th biggest producer of crude oil, according to OPEC data, yet output has fallen by a quarter since hitting peak production of 3.4 million barrels per day in 2004.
The country also is a top oil exporter to the United States but has to import nearly half of its gasoline due to a lack of domestic refining capacity.
“I think the required consensus is in place for a meaningful reform to be passed because both the PAN and PRI favor a market- friendly approach,” said Gabriel Salinas, a lawyer with Mayer Brown’s Latin America energy group.
“But the PRI reform is not expected to be as revolutionary as the PAN’s proposal. It will likely come down somewhere in the middle,” he said.
Pena Nieto will need PAN backing to secure the required two-thirds majority in Congress to pass the bill. The PAN’s proposal raises the likelihood the government will push through a deep reform.
The leftist Party of the Democratic Revolution has made clear it will not support constitutional changes, which it argues are tantamount to privatization. Leftist opponents of any constitutional changes have vowed massive street protests.
Top PRI lawmakers have signaled in recent weeks that the government’s energy reform bill will include controversial changes to the constitution.
The PAN’s energy proposal seeks to reform Articles 25, 27 and 28 of the constitution, and also would strengthen the country’s energy regulatory bodies by making them autonomous.
The proposal would permit other operators to engage in the exploration and production of crude, effectively breaking the monopoly enjoyed by state-run oil and gas company Pemex, Mexico’s sole operator under the existing legal framework.
Reporting by Mexico Newsroom; Editing by Leslie Adler and Bill Trott