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Mexico's Congress Approves Constitutional Reform on Energy

November 11, 2013
Mexico's Congress Approves Constitutional Reform on Energy

The initial obstacle to the energy reform was to resolve whether to amend the Mexican Constitution or merely enact secondary laws. After much debate, the legislature chose to amend the Constitution.The Congress voted to approve amendments to Articles 25, 27, and 28 of the Constitution. The Congress was finally able to achieve a reform to the regulatory structure of the petroleum sector, which is intended to encourage private investment to modernize PEMEX, a company vital for the country's development. The reform has also changed the legal regime governing electric power, which is expected to boost employment and income, which will, in turn, generate development throughout the country.These constitutional reforms were not an easy undertaking, but neither did the reform process put Mexico on the brink of a political crisis. The entire reform will become law after the discussion, debate and approval of regulatory laws that will govern the overall energy reform.Leftist parties will try to use a new mechanism, recently incorporated into the Constitution, calling for a popular referendum on issues of national importance. The energy issue will certainly qualify as such an issue. However, the rules as to such a referendum are complicated, so it is not likely that this will immediately occur. In the end, if utilized, this will be a political tactic.Finally, the reform passed by the Congress, and going forward by at least 17 state legislatures, will amend the legal framework of the energy sector.Contrary to what the left argued many years ago, the reform neither signifies the privatization of PEMEX, nor that Mexico will lose control over its subsurface mineral rights, a subject of fundamental importance to the future development of the country. A new stage lies ahead, promising domestic and foreign investment, use of new technologies, job creation and competitiveness for Mexico in the global energy market.

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