Mexican President Enrique Peña Nieto presented on Monday the government’s proposal for an energy reform to the country’s congress. The plan, which was outlined at 11 a.m. local time (12 p.m. EST), puts an end to two months of speculation and protest over the rumor that Petróleos Mexicanos (Pemex), Mexico’s state-owned oil company, was going to be held over to private investors.
The presentation, streamed live, was followed closely by the nation – to the point that the presidential website crashed for a little over an hour.
Despite the fierce opposition’s arguments, that said the plans was to privatize a company whose nationalization seven decades ago was the symbol of national independence, Peña Nieto assured that “Pemex will not be privatized nor sold, in any way.”
“We are facing a historical opportunity,” said the President in his speech, “to change what has been preventing the country to move forward.”
Peña Nieto called on the national pride in the speech by mentioning former President Lázaro Cárdenas, who in 1938 was maximum responsible for the nationalization of Pemex. “Seventy-five years after expropriation, our country shows the same determination,” he added.
The proposal, which is outlined in its entirety in the Presidential website and was sent to the Mexican Senate for revision on Monday, follows five basic points: Mexico will continue to be the owner of all oil reserves and Pemex; the company will be under a new fiscal system, so it becomes internationally competitive; Pemex will be divided in two departments, one for exploration and production, and another for industrial transformation; more transparency in accounts; and the start of new policies that will promote purchases to national purveyors of hydrocarbons.
Peña Nieto said that these five axis of action have as goal to restitute the production to its 100 percent, through an increase in production and the exploitation of new oil sites. The expectation is to go from the 2.5 million barrels that Pemex currently produces a day to 3 million by 2018.
The Ministry of Energy secretary Pedro Joaquín Coldwell said that, even though there is no intentions of privatizing Pemex, the company will be asociated with partners that will provide a much needed boost to the profitability of the company. "[Pemex] deserves de opportunity to partner up and maximize its production," he said.
In order to allow private participation in a state-owned company, articles 27 and 28 of the Mexican Constitution will have to be revised. Peña Nieto said that the proposal will include the exact addendums to both articles.
This proposal clashes in major points with the one presented by Partido Acción Nacional (PAN)-- its ally in government and Senate -- in July. PAN advocated for a 100 percent privatization of the company via concessions for exploration and production, as well as the end of Pemex's monopoly in the oil industry.
The Partido de la Revolución Democrática (PRD) still has to present their proposal on energy reform at a later date, but they have anticipated that it will not command any changes to the Constitution.
Former Presidential candidate Andrés Manuel López Obrador, representing the left-wing Consejo Nacional del Movimiento Regeneración Nacional, said that this is just a strategy from the government to privatize Pemex. López Obrador said there will be a national protest against the proposal on September 8.