Mexico advances energy reform to reinforce dominant roles of state-owned companies
Mexico's Senate passed on Wednesday laws for an energy reform which strengthens the dominance of state-owned companies Pemex CFE, while opening up new opportunities for private investment in order to achieve the country's goals of self-sufficiency.
The new laws, which received 85 votes for them, 39 against them and one abstention will be sent now to the lower chamber of Congress. It is expected that they will receive final approval.
If the bill is passed, Pemex will be given more freedom to work with private firms in various investment schemes. They would also get better conditions and preferential treatment.
Pemex, in addition to service agreements, will also be able migrate to what they have called mixed schemes as well as exploration and extraction. In these schemes, Pemex will retain ownership of the area but not provide any capital.
It can work in conjunction with private companies within a similar framework to the so-called "farmouts" set forth in the 2013 energy reform.
The former president Andres Manuel Lopez Obrador has harshly criticised the farmout system.
Pemex won't have to undergo a bid process overseen an independent regulator in order to convert existing agreements into mixed participation contracts.
In August, it was reported that Claudia Sheinbaum, President of the United States, would again be seeking associations with private businesses.
The reform mandates that CFE produce at least 54% (or more) of all electricity generated in Mexico.
In Mexico, private companies produce electricity using renewable sources.
The reform establishes also that the electrical system should operate in a reliable and continuous manner, and promotes the transition to renewable sources of energy.
This is in contrast to the position of Lopez Obrador who favored the use of fossil energy. (Reporting and additional reporting by Aida Pelaez-Fernandez, writing by Stefanie Eschenbacher; editing by Cassandra Garrison & Kylie Madry.
(source: Reuters)
