Mexico: President-Elect's Energy Plans to Hinge on Alliances
The success of Mexican president-elect Felipe Calderon's energy plans, like those of many of his Latin American colleagues who do not hold a majority in congress, will depend on his government's ability to forge alliances with opposition parties.
When Calderon, of the ruling center-right National Action Party (PAN), takes over from President Vicente Fox in December, PAN will hold 206 seats of the lower house's 500 and 52 seats of the senate's 128.
Mexico's electoral tribunal this week declared Calderon, a former energy minister, the winner of July's photo-finish presidential race.
The president-elect beat center-left opponent Andrés Manuel Lopez Obrador of the Democratic Revolutionary Party (PRD) with 35.89% of the vote, a slim 0.58% lead. The Institutional Revolutionary Party (PRI) saw their candidate Roberto Madrazo come in third.
Alliances will be key to ensuring that Calderon's energy plans move forward and quench the country's growing demand.
Indeed, according to the energy ministry (Sener), Mexico's power sector needs 509bn pesos (US$46bn) in investment through 2014 to meet annual power demand expected to grow at 5.2%.
According to Claudio Fuentes, director of the Latin American Social Sciences School (Flacso), the "elections demonstrate the need for establishing agreements over government and in the current context, the third force - PRI - will be a key actor.
"PAN will definitely need agreements between parties and with states to guarantee success," Fuentes told BNamericas.
The near future is key to Calderon's energy agenda, Shelly Shetty, senior director of sovereign ratings at Fitch Ratings, said in an interview.
"The next few months will be critical to evaluate the political strategy of President-elect Calderon to pursue his ambitious agenda of streamlining tax structure and liberalizing the energy sector," Shetty said. "These reforms would go a long way toward enhancing Mexico's creditworthiness."
THE LOPEZ OBRADOR FACTOR
Lopez Obrador could complicate the picture as he refuses to recognize the victory and vows to lead a parallel leftist government.
The PRD candidate "is still walking a fine line - he wants to put pressure on the incoming government yet is unlikely to support violence as the political costs would be very high," the Fitch analyst said.
FIRST 100 DAYS
Specific energy sector plans for Calderon's first 100 days in office include promoting legislation that would allow state oil company Pemex to enter into technological associations with other sector companies to explore deepwater deposits.
Other plans include the following: seeking reforms to attract private sector investment to complement government spending in refining and petrochemicals; pushing for laws to help municipalities pursue self-supply projects; and opening the way for bilateral contracts between large-scale users and electric energy producers.
Another priority is advancing the start of operations of natural gas projects in the Burgos basin as well as tapping into renewable energy sources.
Juan Padilla, director of consulting company IPD Latin America, told BNamericas previously that sector priorities include meeting Mexico's increased demand for refined products including gasoline. Other priorities include meeting the country's natural gas needs and consumer demands for competitively priced supply plus the further diversification of the country's current limited sources of energy supply.
In addition, governability and legitimacy issues are certain to influence the administration's energy strategy given the prominent role energy plays in Mexico, according to Padilla.
Earlier this year, energy minister Fernando Canales Clariond said challenges facing Mexico's energy sector include advancing with structural reforms such as management autonomy for Pemex. Other challenges range from guaranteeing supply to promoting renewables.
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