Tuesday, September 13, 2005

Privatizing Pemex?

Mexican President Fox had a substantial reform agenda when he took office in 2000. Among the proposed reforms were privatization of government employee pensions, complete fiscal reform, and privatization of the energy sector, including both Pemex and electricity. So far, the administration hasn't made much progress on its neoliberal reform agenda; competitive politics seems to keep getting in the way. With just one legislative session left in his administration, Fox has stepped up plans to privatize public sector pensions and allow private investment in the petroleum sector.

Essentially, revenues from the state-owned oil company, Pemex, have been used to support the government and too little has been invested in the petroleum infrastructure. (Petroleum is largest source of GDP in Mexico. Tourism is the second largest source of GDP, though some estimate that remittances from Mexican workers in the US may move into second place sometime this year or next.) Now that the Pemex infrastructure needs significant investment, some politicians are calling for private investment in petroleum development. Some on the left want to allow private pension fund administrators (Afores) to invest in domestic petroleum. Others want to open it up to both domestic and foreign investors.

It appears Fox is making one last push to get a reform that would allow some private investment and participation in the petroleum sector in Mexico. Opposition will be fierce, and some say it's the beginning of a slippery slope to privatization. There's also a proposal to develop the natural gas market, as well.

posted by Michelle @ 10:30 AM,

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