Mexico opposition party, PRD, proposes limited energy reform

MEXICO CITY (Reuters) - Mexico’s largest left-of-center political party proposed a plan on Monday that would revamp state-oil monopoly Pemex, but without amending the constitution to permit more private investment in the oil, gas and electricity sectors, as the government has proposed.

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The proposal of the opposition Party of the Democratic Revolution, or PRD, would provide Pemex with budget and management autonomy, and create a new fund to administer the nation’s energy riches.

The proposal would also gradually lower the company’s tax burden by 9 percent to 62.5 percent by 2018, freeing up more resources to invest in exploration and production activities.

Unlike the more aggressive reform bills by President Enrique Pena Nieto of the centrist Institutional Revolutionary Party (PRI), as well as the conservative National Action Party (PAN), the PRD’s bill does not include amending the constitution to permit more private investment.

The cornerstone of Pena Nieto’s reform is a new profit-sharing contracting scheme aimed at luring private capital and boosting output, while the PAN calls for the establishment of concessions for oil and gas developments.

The energy reform is the central plank of a wide-reaching reform package Pena Nieto hopes will boost growth in Mexico, Latin America’s second largest economy, and drag its energy industry into the modern era.

High-ranking government officials say Pena Nieto’s proposal seeks to open up a range of new and mature oil and gas fields to private firms, and new partnerships with Pemex could be launched in the second half of next year.

The PRD proposal would overhaul the company’s administration by removing most government officials as well as all union officials who currently serve on the company’s board.

A proposed national petroleum fund that would administer future oil and gas profits is a rare point of agreement between the country’s three major parties.

The PRD reform was announced in an out-door speech in Mexico City by Cuauhtemoc Cardenas, the party’s founder and the son of legendary President Lazaro Cardenas who nationalized the oil sector in 1938.

In a newspaper column late last week, Cardenas said Pena Nieto’s efforts to use his father’s legacy to push a constitutional reform were “offensive” and “unpatriotic.”

Andres Manuel Lopez Obrador, who finished second to Pena Nieto in last year’s presidential election and has since broken ranks with the PRD, has vowed street protests next month against any constitutional reform, which he calls “traitorous” and the same as privatization.

The PRD has distanced itself from Lopez Obrador and the prospect of disruptive protests, which could give the party’s lawmakers a freer hand to negotiate a compromise.

The government’s proposal sits in a middle ground between those of the PAN and PRD.

A new poll published on Monday gave the government’s plan a boost, revealing that 58 percent of adults favor constitutional changes to allow private companies to extract oil.

Published in daily newspaper Excelsior, the telephone survey by pollster BGC questioned a random sample of 400 men and women over age 18 on August 16, after both the PAN and government’s bills had been presented. The poll’s margin of error was 5 percent.

Reporting by David Alire Garcia; Editing by Simon Gardner and Carol Bishopric