Column: Fluvio Ruíz Alarcón.
At the beginning of this year, Morena’s bench in the Chamber of Deputies presented an initiative to reform the Law of Petróleos Mexicanos. However, a day before its ruling in the Energy Commission, the President of Mexico stated his opposition to reforming the existing law so as not to give pretexts to its detractors. After this declaration, the verdict was suspended.
Beyond the implications of this postponement in terms of the division of powers, the fact itself constitutes a timely rectification of a reform that could have brought Pemex greater suspicions and doubts about its operation in the long term, as well as greater distrust from the financial environment.
This project contains approaches that are contrary to the best corporate governance practices, as well as a setback in terms of transparency and accountability, such as substantial elements of the fight against corruption. It also includes clear nonsense, such as endorsing our oil company with the responsibility to ensure energy security and sovereignty (which are not defined anywhere). For decades, Pemex had the responsibility of guaranteeing the supply of hydrocarbons and its derivatives in the country, but never energy security and sovereignty, which obviously go beyond the oil issue alone.
In the initiative, there is clear confusion about the nature of the exploration and production contracts referred to in the Hydrocarbons Law and the Hydrocarbons Revenue Law. Until there is a reversal of the energy reform in this area, the wording of articles 27 and the transitory tenth of the 2013 constitutional reform prevents Pemex from accessing these contracts granted by the Mexican State, without participating in the corresponding bids organized by the National Hydrocarbons Commission.
Regarding the Administrative Council, the motion seeks to take away from it so many faculties that it would end up as subordinate to the general director of Pemex and become a kind of Advisory Board. The Administrative Council would lose, amongst other things, its main function of being responsible for the central management and strategic direction of Pemex’s activities, which would be passed on to the general director, who could even decide which topics to bring to the attention of the Council and which not. In addition, independent advisors would see their value reduced in front of state directors, who may defend interests that are not necessarily aligned with those of Pemex (the obvious case is that of the representatives of the Ministry of Finance).
The approval of the project would have an impact on the architecture and dynamics of the sector, because of the fact that the administration of Pemex could end up undermining the power of the Secretary of Energy in the design of public policies, on hydrocarbons and their derivatives. This would imply a step back into the time when the roles of policymakers, regulators, evaluators, and implementers were mixed up.
Five years after the energy reform, the suspension of the ruling of this initiative opens a space that should be used for a broad and deep discussion, both on the institutional architecture of the hydrocarbons sector, as the administrative organization of Pemex.