PEMEX to Lose Monopoly Status after 75 Years

Enrique Peña Nieto, the President of Mexico, has won support from his party, the Partido Revolucionario Institucional (PRI), to continue with his plans for developing the country’s energy sector and ending the 75 year monopoly by the state-owned oil company PEMEX.

The bill to end the monopoly of the Mexican oil industry has not yet been confirmed as it must first be passed by a vote in Congress. Peña Nieto’s coalition party controls 241 of the 500 seats in the lower house of congress, and the bill must win two-thirds of the total votes in Congress, and a majority support from the legislatures from the 31 states of Mexico and the Federal District.

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In an attempt to boost economic expansion, Peña Nieto pledged to increase competition in the oil industry and reduce the taxes. According to the Energy Minister, Pedro Joaquín Coldwell, Peña Nieto hopes to increase GDP by as much as 2 percentage points a year.

Plans to reduce taxes in the oil industry may be compensated by increases in the levies placed on food and medicine. Tax revenues currently only account for 18.1% of GDP, the lowest ration in the entire Organization for Economic Cooperation and Development, and increasing it would be another good way of encouraging economic growth.

By. James Burgess of Oilprice.