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Pemex Explosion a Test for Mexico's New President

Posted: Feb 04, 2013


The explosion that left dozens dead at the headquarters of Pemex in Mexico City is a test for the brand-new administration of Enrique Peña Nieto, one that involves some of the thorniest issues: transparency and oil.

First of all, the government acted quickly to establish an information center, but did not rush to conclusions about what caused the explosion. There is deep distrust among Mexicans when it comes to the authorities giving explanations. And if these come from the PRI, the doubts are even worse. That is why the official abundance of caution in keeping all options open, even the possibility of an attack against the oil company, is positive.

At the same time, it is interesting that this incident happened at a key time for the future of Pemex.

One of Peña Nieto's priorities is energy reform, which seeks to implement changes because of the fall in oil production that occurred in recent years. The already low level of reinvestment in Pemex has been decreasing, at the same time that the amount of money that the oil company has been generating to fund the government's budget has been falling.

The president says he only wants to open up the company to private capital in order to modernize it, like Brazil did with its state oil company, Petrobras. However, the fiercest critics say this is a road to privatization, raising the flag of nationalism and the possibility that funds will be lost if the percentage of money devoted to public spending gets cut.

In Mexico, an explosion of this magnitude lends itself, rightly so, to all kinds of speculation: from an accident to an attack with multiple possibilities. The government must remain publicly cautious while it investigates. Among the uncertainty that surrounds this incident, we must keep an eye on the impact that this deadly explosion will have on the discussion about the future of Pemex.




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