February 19, 2021
1. Natural gas shortage causes crisis in industrial sector
Natural gas imports to Mexico from Texas were affected as a result of winter storms causing widespread power outages. As a result, the Federal Electricity Commission (CFE) will receive four natural gas ships to supply their power plants. The injection of natural gas will be made from the ports of Manzanillo and Altamira and help recover electricity generation loads at power plants in Salamanca, San Lorenzo Potencia, Tula and the Mexico Valley.
This situation severely affected industries in the northern part of the country. Gabriela Siller, director of economic and financial analysis at Banco Base, mentioned that “the first quarter looks to have a GDP growth close to 0% or negative, due to COVID-19 and the blackouts”. At the same time, several experts in energy issues point out that the Mexican government’s response has been late and inefficient, in addition to not providing certainty regarding the reestablishment of the service.
2. Electricity industry reform worries business sector
The Energy Commission of the Chamber of Deputies will approve the ruling on the presidential initiative to reform the Electricity Industry Law. President Andrés Manuel López Obrador stated that said bill “will put an end to years of looting and privileges for private electricity generation and the imposition of a market tailored to private companies”.
For its part, the Business Coordinating Council stated that with the approval of this initiative, tariffs will increase by 17% by 2026, a cost overrun that will have to be passed on to consumers or absorbed by the Ministry of Finance and Public Credit, which would be forced to use resources from taxes. Therefore, they proposed a new private investment framework within the guidelines of existing legislation.
3. Foreign Direct Investment decreases 11.7% in 2020
During the year 2020, Foreign Direct Investment flows registered a figure of USD $29.08 billion dollars, an 11.7% decrease of 11.7% compared to the USD $32.92 billion reported in 2019. The United Nations Conference on Trade and Development (UNCTAD) explained that 55.4% of the capital captured stems from reinvestment of profits, followed by 22.6% of intercompany accounts and 22% of new investments.
This reduction in investments occurs against the backdrop of a 42% decrease in global flows. In the case of Mexico, it is worth noting that the United States was the country of origin of most investments at 39.1%, followed by Canada with 14.5%, Spain with 13.7%, Japan with 4.2% and Germany with 3.5%. Foreign investment is focused primarily in the manufacturing, financial services, transportation, commerce, and mining sectors.
El Universal: Cae 11.7% Inversión Extranjera Directa en 2020
4. Pemex will benefit from a greater reduction in its tax burden
Finance and Public Credit Secretary Arturo Herrera announced a reduction in the tax burden borne by Petróleos Mexicanos (Pemex) in 2021. This measure will help the state-owned company reorganize its finances, as it has debt liabilities of USD $110.3 billion, a decrease in production and other fiscal obligations.
It is worth noting that Pemex already has had taxes reduced this year as a result of a change in Mexico’s Hydrocarbon Revenue Law to reduce its profit-sharing rate for 2020 and 2021. Last year, Pemex received MXN $46.3 billion (USD $2.27 billion) in tax benefits as a direct result of the law. This new reduction is in addition to these benefits.
5. Vaccination of seniors against COVID-19 begins
The third day of the COVID vaccination program in Mexico City reports that 14,694 older adults were vaccinated, for a total of 76,608 people vaccinated. In Mexico City, the Vaccination Plan began in the following municipalities: Magdalena Contreras, Cuajimalpa and Milpa Alta. The head of government, Claudia Sheinbaum, highlighted the enthusiasm and participation of senior citizens in these three municipalities.
In response to some complaints that photographs were being taken of the official IDs issued by the National Electoral Institute (INE) of senior citizens attending vaccination centers, the Deputy Secretary of Health, Hugo López Gatell, indicated that it will not be necessary to take photographs of this official ID or of the senior citizens; it will be sufficient to present the Unique Population Registry Code (CURP), their address and a telephone number.
Milenio: Van 76 mil 608 adultos mayores vacunados contra Covid-19 en la CDMX.
Aristegui Noticias: Ya no se tomarán fotografías a personas ni credenciales del INE en módulos de vacunación: López-Gatell