Considering that the government had already publicly eschewed privatisation and declared that any reform of the electricity sector should preserve the commanding role of the state, it came as no surprise that President Vicente Fox publicly praised the PRI for its policy statement. He did so in an address to the G-20*, whose meeting he was hosting in Morelia; there he put in the context of how Mexico was advancing towards reform. His office also released a communiqué with the appropriate excerpts, for domestic consumption. The President, it said, had `expressed his recognition for the advances achieved by the Partido Revolucionario Institucional in favour of [the] reforms.'
The policy statement was issued by the party's national political council, and is not binding on the party's legislators; hence the very political move of `entrusting' the detailed negotiations to them. It is clearly an attempt by party leader Elba Esther Gordillo and chairman Roberto Madrazo to head off Bartlett and his camp, by sounding suitably nationalistic but stopping well short of such moves as seeking to reverse in the courts the private participation already granted.
The provision in the policy statement that refers to a reformed legal framework is meant to signal intent to eradicate the manoeuvring with the current private generation arrangements that last year provoked an intervention by the supreme court. The existing régime allows industrial firms to generate their own power and sell any excess to the CFE for general distribution; what had been happening was that the own-use generation was being used as a fig leaf for far greater generation for general distribution via the CFE.
Insisting on tax reform
The government is still trying to win over legislative support for its tax reform proposals, and particularly the provision for extension of the value-added tax (IVA) to previously exempt activities and products, at a single, lower rate.
Revenues undersecretary Rubén Aguirre has been arguing in congress that the current régime is expensive to collect: this year it will cost M$124.3
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