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Energy reform proposal likely to pass
Source: Bnamericas
Date: 04/14/2008 00:00
The odds are good Mexico`s congress will pass the energy reform proposal - or a modified version of the bill - introduced by President Felipe Calderón, according to industry analysts.
Only a simple majority vote is required in congress to pass the bill because it does not call for constitutional reform. The ruling PAN party needs another 14 votes in the senate and 44 in the house to achieve a majority.
"We do not believe this is a difficult task," US investment bank Bear Stearns (NYSE: BSC) said in a statement.
The government has waged a successful public campaign and political will exists as lawmakers have been discussing possible energy reform since 2005, Bear Stearns said.
The bill, which aims to help state oil company Pemex improve its operations and finances, is before the senate.
PRI, PRD FACTORS
PRI - the biggest party in congress behind PAN - will be the crucial factor in achieving a majority.
The fact corruption allegations against interior minister Juan Camilo Mouriño have faded confirms a PRI-PAN alliance is still intact, Bear Stearns said.
Further, at PRI`s national political council, general secretary Jesus Murillo Karam "did not raise the topic of energy reform, implying the party is not forcing members to take an official view," the statement said.
PRI leaders could seek amendments to the reform such as special revenue sharing agreements with oil-producing states.
Pamela Starr, an expert in Mexican politics, stressed the core of the reform proposal contains elements PRI has been proposing so former presidential candidate Andrés Manuel López Obrador (PRD party) likely will be incapable of blocking it.
PRD lawmakers, especially in the senate, do not have "their hearts in it" when it comes to the fight against Calderón`s reform.
"They don`t really want to block this initiative. They can`t publicly say so because of López Obrador`s stranglehold over the party base and his hold on this issue," Starr said in an interview.
Moderate PRD members "are stuck between a rock and a hard place," an analyst from consultancy PFC Energy, RoseAnne Franco, said over the phone. "They`re really being forced to show their leftist credentials."
SHOOTING FOR THIS SUMMER
The current congressional period ends on April 30 and the chances of reform going through in three weeks are slim, analysts said.
"I think the odds of it passing before the end of the current session at the end of the month are extremely long. I would give it a 5-10% possibility," Starr said.
Franco agreed passing it in the current term would be "very difficult." Bear Stearns said it could potentially pass through the senate this term, but not the lower house.
The reform debate, then, would either go into a special summer session or get pushed back to the fall. The former seems to be a more likely outcome.
"I think they would probably have to deal with it during a special session, which would be this summer. It could go into the fall, but they have to be careful because then you go into the mid-term candidacies for legislators and there will be less political room to maneuver," Franco said.
Bear Stearns agreed that any alliance between PRI and PAN could break down as 2009 mid-term elections are drawing near and the legislative agenda becomes politicized.
"My guess is that they will probably have a special session of congress. I doubt they`re going to want to put it off to the fall, but I can imagine that happening," Starr said.

