Mexico Seeks Private Sector Infrastructure Investment As Oil Slump Bites


MEXICO CITY, March 12 (Reuters) - Mexico's government on Thursday urged the private sector to take a bigger role in billions of dollars worth of planned public works and the opening of the country's energy sector, weeks after scaling back its own planned spending due to slumping oil prices.

Finance Minister Luis Videgaray said he expected low crude prices to continue into next year, a development which has already dealt a major blow to a country that has long relied on oil revenues to fund around a third of the federal budget.

The government last year said it planned to raise 7.7 trillion pesos ($498.74 billion) in infrastructure investment through 2018, but in late January cut its 2015 budget by nearly 3 percent and shelved a tainted $3.75 billion high-speed train tender as part of its austerity measures.

Mexico, a major crude exporter, has suffered from a slowdown in growth in the past two years and the recent drop in crude prices has made a landmark opening of its oil and gas sector finalized last year less attractive to private investors.

The oil slump has left Mexico more dependent on stoking growth through the infrastructure spending plan, and Videgaray said he is now analyzing how more private money could be drawn in via potentially lucrative concessions and other mechanisms.

"We have a great opportunity, particularly in terms of the national infrastructure program, for greater private sector investment and to use mechanisms like public-private partnerships," Videgaray told a conference. "This is particularly evident in the energy sector," he added.

Last month, the central bank revised down its Mexican growth outlook for 2015 and 2016 as the crude slide dampened hopes for the energy reform, which had formed the centerpiece of the government's plans to revive the economy.

The reform ended a 75-year-old monopoly enjoyed by state-run oil company Pemex and aims to reverse a slide in crude output, which has plummeted by about one-third since 2004.

Mexico's energy regulator said this month it would give oil companies a bigger share of profits and more flexibility in contracts in the historic opening after a host of companies said the initial terms would deter them.

Executives at oil companies like Britain's BP and U.S.-based Occidental Petroleum Corp criticized the initial terms as too stingy and uncompetitive compared to investment opportunities elsewhere.

($1 = 15.4390 Mexican pesos)

(Writing by Simon Gardner; Editing by Dave Graham and Meredith Mazzilli)

Copyright 2016 Thomson Reuters. Click for Restrictions.


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