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Mexican president proposes constitutional changes to modernize oil industry

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(Globalpost/GlobalPost)

Mexico City, Aug 12 (EFE).- President Enrique Peña Nieto on Monday unveiled energy industry reforms that call for changing two articles in the Mexican Constitution to modernize the sector by allowing private investors to play a bigger role without stripping the nation of its ownership of natural resources.

The president, who is dealing with a sensitive issue among Mexicans, said he wanted to reform Article 27, which President Lazaro Cardenas added to the constitution during his 1934-1940 term, to open the way for contracts that allow state-owned oil giant Petroleos Mexicanos, or Pemex, to share profits with the private sector.

Both Pemex and the Federal Electricity Commission, or CFE, "will remain 100 percent the property of the nation ... They will not be sold or privatized," Peña Nieto said.

The goal of the proposals, which are being presented to the Senate on Monday, is to strengthen and modernize the two state-owned companies so they will once again be "cutting-edge companies," as well as to reduce energy costs for families, the president said.

The reforms will allow the nation to retain ownership over hydrocarbons and permit Mexico to exploit its estensive energy resources under state control, Peña Nieto said during his presentation at the Los Pinos presidential residence.

The plan also calls for a new tax regime for Pemex, a reorganization of the energy company into two subsidiaries, greater management independence and an "efficient and modern" structure, the president said.

The government wants Pemex's production to rise from about 2.5 million barrels per day (bpd) now to 3 million bpd in 2018 and 3.5 million bpd by 2025.

"Mexico has a historic opportunity" to promote reforms "capable of transforming and raising the quality of life of Mexicans," Peña Nieto said.

Overhauling the energy industry will create "hundreds of thousands of new jobs" and reduce the cost of electricity and gas for families, small businesses and mid-sized enterprises, the president said.

The left opposes any effort to privatize Pemex or open the oil industry to private investment.

The opposition Party of the Democratic Revolution, or PRD, plans to hold a national referendum on the future of Pemex, energy industry reform and the tax system.

Pemex has a monopoly on the production of oil and gas, as well as on the production of petroleum derivatives and the distribution of gasoline.

http://www.globalpost.com/dispatch/news/agencia-efe/130812/mexican-president-proposes-constitutional-changes-modernize-oil-ind