A test for Peña Nieto

The explosion that left dozens dead at the headquarters of Pemex in Mexico City is a test for the new administration of Enrique Peña Nieto, one that involves some of the thorniest issues — transparency and oil.

In the wake of the disaster, the government acted quickly to establish an information center, but did not jump to conclusions about what caused the explosion. There is deep distrust among Mexicans when it comes to official explanations. And if these come from Peña Nieto’s party, Institutional Revolutionary Party (PRI), the suspicions become even worse. This is why the government’s caution with keeping all options open, even the possibility of an attack against the oil company, is smart.

At the same time, it must be noted that this incident happened at a key time for the future of Pemex.

One of Peña Nieto’s priorities is energy reform. This is in response to the fall in oil production that has occurred in recent years. The reinvestment in Pemex, already at low levels, has been decreasing. At the same time, the amount of money that the oil company has been generating to fund the government’s budget has also declined.

The president says he only wants to open up the company to private capital in order to modernize it, as Brazil did with its state oil company, Petrobras. However, his fiercest critics say this is a road to privatization, raising the flag of nationalism and the possibility that funds will be lost if the percentage of money devoted to public spending is cut.

An explosion of this magnitude lends itself to all kinds of speculation, so the government must ensure a thorough investigation. And in the uncertainty this incident has provoked, we must keep an eye on the impact that this deadly incident will have on the discussion around the future of Pemex.