Mexico energy’s road to reform: enabling legislation goes before Congress
by Jed Bailey | May 12, 2014
On April 30, 2014, the Mexican government submitted to Congress draft laws that would implement the Constitutional reforms passed in December, 2013. This next major step along the long road to energy reform confirms the government’s dedication to recasting Mexico’s energy landscape and sets the stage for the next round of political debate.
The draft laws, as well as the pace of progress so far, support the views of pessimists and optimists alike. At first glance, the draft legislation appears to adequately balance the many potentially conflicting requirements of energy companies (both state owned and private), politicians, energy consumers, and the government treasury. Progress toward establishing Pemex’s future role in the upstream (the “Round Zero” acreage allocations) is also encouraging. On the downside, the legislation was not introduced until the final day of Congress’ normal session, requiring special sessions over the summer for the new laws to be passed before September. As the details of the proposed reform become more concrete, so, too, will the political resistance to change.
The proposed legal changes are both broad and profound. Maintaining momentum is critical for the reforms to avoid being bogged down in the Congressional elections. While the legislation only requires a majority to pass, and the opposition PAN party is broadly supportive, further political wrangling is likely over the summer and compromises to broaden support for the bill may still significantly change the laws’ content and timing.