Mexico Ends Oil and Gas Monopoly Part 2
Mexico Ends 76-Year Old State Oil and Gas Monopoly /Part 2
The President is using figures to counter the theory that the nation will be losing some serious revenue if its oil and electricity is turned over to private parties.
Pemex, which is the name of the oil and gas company and was in the hands of the state for 76 years,employs 150,000 workers. The company has lost $9.3 billion dollars in 2013, but is ready to compete in an increasingly technical market. In the last 13 years, investment in the company has tripled, even as oil production dropped by a third. As a result, Mexico, which is the world’s seventh largest energy producer, needs to import 30 percent of the oil and 49 percent of the gas it consumes.
The reform will try to overcome the situation by turning Pemex and its electricity counterpart into what are known as productive companies. The have more power of self-rule, but at the same time are held accountable for results.
Even so, many economists warn that the reform will not dismantle the heavy paternalistic structure at Pemex, which has one of the lowest productivity rates of all international oil companies.
Under the new system, the oil reserves will still be in state hands, but concessions will be awarded to private companies. Those who have designed the reform, trust that this will attract foreign capital with enough capacity to exploit the vast shale gas pockets in the north of the country, and to explore the deep reserves. This exploration requires the kind of technology and money that Pemex lacks.
The government estimates that by 2018 the changes will have created 500,000 new jobs, increased oil production by 20 percent, gas production by 40 percent and pushed the GDP growth up one full point.
Average economic growth in Mexico has been 2.4 percent in the last 30 years, but the Pact for Mexico has set a target of 5.0 percent which the authorities believe should be enough to address the country’s major problems of poverty and inequality.
One of the first effectshas been the breakup of businesstycoonCarlos Slim’s telephone empire, a fact that has been viewed abroad, as a political victory for the President.
Inside Mexico the changes are being greeted very coldly. Surveys show dwindling support for thereform program, leading the presidency to launch a strong reactivation planbasedon a overhaul ofthecountry’s infrastructure. With a budget of $589 bilion, of which 63 percent is pubic capital, theplan foresees building 10,000 kilometers of gas pipes, new railroades and perhaps even anotherairport in Mexico City. Anything really t insure that theeconomy finally takes off.
