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Excelling corporate governance and board arrangement at Pemex

Camping in PEMEX grounds; breaking a taboo.

This article is the fifth of a 5-part series on Mexico’s Energy Reform. Return to the main article here.

It is expected that stable, predictable, and efficient public policies contribute positively to the creation of value by a National Oil Company (NOC) as Pemex[1]. However, in the case of Mexican energy delimiting the policy-making, regulation, investment budget control and accountability were threateningly intertwined. In 2008, a new institutional structure for oil and gas in Mexico[2] brought progress on transparency and corporate governance, nonetheless the country is still in the lowest half (25th to 50th percentile) among all countries in the world (cf. Figure 1). The company-government agency duality results in Pemex being over-employed and being relatively inefficiently managed. Hartley & Medlock’s analysis (2011) suggests that Pemex would have been able to earn more than 48% additional revenue, on average, in each year by more efficiently employing the resources at its disposal. Similar issues are presented in the power sector. The Comision Reguladora de Energia (CRE) has principle regulatory oversight of the electricity sector, but does not have direct jurisdiction over CFE.

Improving Pemex’s and CFE’s corporate governance, transparency and accountability would result in enhanced economic welfare. Since Pemex must give a …

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