Mexico president Andres Manuel Lopez Obrador (AMLO) sent a bill on Friday to the Mexican Congress, which allows the suspension of permits to private hydrocarbon companies on account of national security, significantly favoring the state oil company Pemex. Considering that AMLO holds majority in both Congress houses, the proposed bill, if passed as law, will allow suspensions o oil imports and exports, distribution and storage permits on the grounds of “national security”. This could trigger legal challenges.
The authorities have 90 days to respond to the permits suspension for it not be considered “not granted”. Alfredo Sandoval, a Banco Base economist said, “If permits were to be suspended, the government could send in a state enterprise — such as Pemex and CFE— to run things, but without affecting the legal ownership.” Congress had approved changes to the electricity sector a few weeks ago, improving CFE’s position over cheap renewable resources. After two clean energy companies responded to the electricity reform, the bill got suspended.
Pemex bonds were stable with its USD 6.875% 2026s at 107.745, yielding 5.19%.
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