Pacto por Mexico – Energy Reform Update

It has taken a bit longer than expected for the secondary legislation of the Energy Reform to make it through the Congress. On Wednesday, the Senate published the changes made to the secondary legislation in committee, all of which can be viewed here. Yesterday, July 17, the Senate held an extraordinary session to discuss the changes. At this session, the Senate approved ‘in principle’ one of the four categories of changes – to the Law on Hydrocarbons. A ‘detailed’ discussion in the Senate continues today and tomorrow, possibly extended into Monday. On Wednesday, July 23, both the Senate and Chamber of Deputies will then consider the changes to the secondary legislation, with the aim of final approval by the first week of August at the latest.

Here is a roundup of the most significant of the 250 changes to the secondary legislation:

  • No expropriation – previously, the secondary legislation had included a provision allowing for land needed for development of hydrocarbons to be expropriated for reasons of ‘public utility’ (i.e., similar to ’eminent domain’ in the U.S.). Both the PAN and PRD demanded this be removed. The compromise is language allowing for ‘temporary occupation’, and requires the company carrying out the activities to pay a percentage of profits and compensation for any damages to the landowner
  • No activities in protected areas – the original secondary legislation only ‘limited’ exploration and extraction of hydrocarbons from ‘protected areas’ (zonas de salvaguarda). The PAN’s change prohibits these activities entirely.
  • Reduced foreign investment options in transportation of fuels – the PAN’s changes prohibit foreign participation in the road transportation of fuel, and limits it to 49 percent in rail, ship, and airplane transportation. The PAN explained that completely opening this sector to foreign participation would undermine SMEs.
  • Control over PEMEX/CFE directors – the original secondary legislation allows the President to nominate the independent directors of both PEMEX and CFE and, if no action is taken within 30 days, their nominations would be approved. The PAN change now treats this silence as a rejection. Also, in the previous draft, the President had the sole authority to remove PEMEX and CFE directors; now, such removals must be approved by the Senate.

 

This entry was posted in economy, energy, legislation, oil and gas, Pact for Mexico, pemex, reform. Bookmark the permalink.

One Response to Pacto por Mexico – Energy Reform Update

  1. Pingback: Pacto por Mexico – Energy Reform Passed | The Mexico Monitor

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