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MEI Market Note 142: What the PRI Must Learn About the Energy Sector

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In its seventy years in power, the PRI built a powerful, staterun economy in the energy sector, based on two constitutional principles: 1) economic development would be guided by the State, and 2) the oil and power industries, as such, would remain offlimits to the private investor who would seek a role as a producer and commercial actor in Mexico. The twelve years of rule by the PAN did nothing to change this basic framework.

In the old days of the PRI, Pemex, CFE and LFC were selfregulated, with only a courtesy nod to the Energy Ministry (known by a sequence of acronyms: SEPAFIN, SEMIP, and, since the 1990s, SENER). Given the prohibition on independent commercial actors, all retail prices were set by the State, either directly by committee, or by algorithm (as in the case of netback pricing for natural gas based on U.S. price benchmarks).

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