It looks like this week Mexico will finally see what the long-awaited energy reform will look like:
Mexico’s plans to break a 75-year state monopoly on energy could boost flagging growth and double foreign investment, potentially providing the biggest leg-up to its economy since the North American Free Trade Agreement two decades ago.
The government is finalizing proposals to lure private investors into the oil, gas and electricity industries in order to boost production and lower energy costs for manufacturers, which are up to twice as high as those paid by U.S. companies.
The plan is expected to be unveiled and sent to Congress this week. It is likely to include tweaking articles of the constitution that prohibit private ownership of Mexican oil.
The level of access to private firms, including foreign oil majors like BP and Exxon Mobil, will be crucial to the reform’s success.
(Read the entire article from Canada’s The Globe and Mail here.)
While the reform will almost certainly fall short of privatization, which would meet with hostility even within President Enrique Pena Nieto’s own party, there will be broad opening to private, foreign investment.
Like so many moves we’re seeing from Mexico’s government these days, this is expected to boost the economy and foreign investment.
-by Thomas Lloyd
[…] week, Financial Times put out an article about the impact that last week’s reforms of Mexico’s oil industry may have on […]