Energy reform is a hot topic in Mexico
Mexican President Enrique Peña Nieto has made energy reform a top priority for the near future. According to The Washington Post, Peña Nieto and other Mexican leaders are reviewing various solutions to help enhance the nation's energy segment.
Since taking over as president in December 2012, Peña Nieto has sought ways to help the country boost its revenue. While Mexico is still the third-largest source of foreign oil for the U.S., Peña Nieto will embark on a massive system overhaul during the summer that could deliver long-lasting rewards to Mexican residents and those who work in the U.S. and send money to family members south of the border.
"This is about a practical reform that will allow for the introduction of new technology, which we lack, and accelerate the growth of our energy resources in order to lower electricity costs for Mexican families and businesses, and give us a more dynamic energy industry," Peña Nieto told the news source.
Peña Nieto looks to accelerate energy industry growth
Petroleos Mexicanos (Pemex), the largest oil company in Mexico and Latin America, significantly affects Mexico's economy. As part of the nation's energy reform efforts, Peña Nieto may help Pemex reduce its taxes to ensure that the firm can effectively support the country and its citizens.
GlobalPost reports that nearly 60 percent of Pemex's revenue currently goes into the Mexican treasury, and this total represents roughly 40 percent of the government's income. Meanwhile, Pemex earns approximately $100 billion a year in revenue, but the company could further increase its profits by receiving tax breaks from the Mexican government.
The lack of competition among energy oil providers is a major consideration among Mexican leaders as well. Pemex has a monopoly in the country, and George Baker, a global oil industry expert, states that Mexico must attract foreign investors to increase its energy sector profits.
"If you only make Pemex more efficient in Mexico, that's not enough," Baker told The Washington Post.
Former U.S. ambassador Tony Garza has encouraged the Mexican government to diversify its energy industry investments. By promoting competition among oil companies, more jobs could become available across the nation, which may deliver a substantial boost to the country's economy. Additionally, diversification could help keep electricity costs lower for Mexican business operators and citizens around the country and enable the nation to improve its revenue without delay.