Mexico


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Oil production has been the most important extractive activity in Mexico since the 1970s, and petroleum generated 33 percent of government income and 20 percent of exports in 2011. While Mexico remains one of the top producers in the world, oil exports have declined as fields are depleted and domestic consumption rises.


Mexico's Performance on the Resource Governance Index

Mexico received a "satisfactory" score of 77, ranking 6th out of 58 countries, the result of high scores on all components except on the Enabling Environment.

Rank
(out of 58)
Score
(out of 100)
6 Composite Score 77
6 Institutional & Legal Setting 84
Freedom of information law 100
Comprehensive sector legislation 100
EITI participation 0
Independent licensing process 100
Environmental and social impact assessments required 50
Clarity in revenue collection 100
Comprehensive public sector balance 89
SOC financial reports required 100
Fund rules defined in law 100
Subnational transfer rules defined in law 100
7 Reporting Practices 82
Licensing process 33
Contracts 33
Environmental and social impact assessments 50
Exploration data 100
Production volumes 100
Production value 100
Primary sources of revenue 100
Secondary sources of revenue 67
Subsidies 100
Operating company names N/A
Comprehensive SOC reports 100
SOC production data 100
SOC revenue data 83
SOC quasi fiscal activities 100
SOC board of directors 100
Fund rules 100
Comprehensive fund reports 33
Subnational transfer rules 100
Comprehensive subnational transfer reports 67
Subnational reporting of transfers 100
8 Safeguards & Quality Controls 81
Checks on licensing process 50
Checks on budgetary process 67
Quality of government reports 87
Government disclosure of conflicts of interest 100
Quality of SOC reports 100
SOC reports audited 100
SOC use of international accounting standards 100
SOC disclosure of conflicts of interest 100
Quality of fund reports 67
Fund reports audited 100
Government follows fund rules 33
Checks on fund spending 100
Fund disclosure of conflicts of interest 100
Quality of subnational transfer reports 50
Government follows subnational transfer rules 67
18 Enabling Environment 53
Corruption (TI Corruption Perceptions Index & WGI control of corruption) 45
Open Budget (IBP Index) 61
Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 61
Government effectiveness (WGI) 62
Rule of law (WGI) 34
Satisfactory Weak
Partial Failing
To explore all data and compare
scores, use the RGI Data Tool.

Institutional & Legal Setting (Rank: 6th/58, Score: 84/100) learn more

Mexico's extractive resources are governed by a strong legal framework, leading to a "satisfactory" score of 84.

By law, the state-owned oil company PetrĂ³leos Mexicanos (Pemex) dominates the industry. There is no licensing process, though Pemex does sign service contracts with other companies. Some contracts are awarded through competitive bidding, but Pemex may also sign agreements through a non-competitive "direct award" process.

The National Hydrocarbon Commission regulates the sector, while the Energy Ministry oversees Pemex's activities and sets policy. The Finance Ministry collects taxes and other revenues and transfers them to the treasury. The Federal Transparency and Access to Information Law requires comprehensive disclosure of industry information; environmental impact assessments are also required.

Reporting Practices (Rank: 7th/58, Score: 82/100) learn more

Mexico received a "satisfactory" score of 82, reflecting comprehensive disclosure on many revenue indicators but poor contract transparency.

Only limited information on Pemex's subcontracting policies is published before contracts are awarded. Information on the selection process is not always available, and service contracts are not published.

Comprehensive industry data are available online, but reports can be difficult to understand and information must be pieced together from different agency websites. The Finance Ministry publishes disaggregated data on payments received from Pemex, export values, production costs, and the cost of subsidies. The Energy Ministry and the National Hydrocarbon Commission publish reports on the petroleum sector, but rely on information from Pemex.

Safeguards & Quality Controls (Rank: 8th/58, Score: 81/100) learn more

Mexico's "satisfactory" score of 81 is largely due to substantial audit requirements that are not always effective in practice.

Pemex officials exercise considerable discretion in the subcontracting process. Congress oversees Pemex's activities and must approve the company's budget. Lawmakers have no responsibility to review service contracts, but may request information from Pemex officials.

National audit organizations have the power to review all government accounts, including those of Pemex. In practice, however, auditors lack the capacity to effectively oversee the oil sector and review only a small fraction of public funds. The Supreme Audit Institution presents lawmakers with annual reports, but the figures are often at least a year old. Several legislative committees review audit reports but do not focus specifically on resource revenues.

Enabling Environment (Rank: 18th/58, Score: 53/100) learn more

With a particularly low ranking for the rule of law, Mexico received a "partial" score of 53, its lowest on any component.


State-Owned Companies (Rank: 2nd/45, Score: 98/100) learn more

Pemex is entirely government-owned and has a legal monopoly over petroleum exploration, production and commercialization. The company publishes information on reserves, field-by-field production volumes, prices, export values, investment, production costs, social payments made to local governments in producing regions, disaggregated revenues, and payments to the government. Some of this information is buried in highly technical reports. Pemex's accounts are audited in accordance with international standards and audit reports are made public.

Natural Resource Funds (Rank: 6th/23, Score: 79/100) learn more

Oil prices have exceeded the price estimated in the national budget each fiscal year since 2006, resulting in additional revenues. In 2002 the government created the Oil Income Stabilization Fund to ensure continued investment in Pemex. The fund is one of four stabilization funds that by law must receive any surplus oil revenues; it is administered by the Finance Ministry. Rules for deposits and withdrawals are defined by law, but Congress has approved changes allowing the fund to cover Pemex's operating expenses. Basic financial data are published quarterly and presented to Congress.

Subnational Transfers (Rank: 8th/30, Score: 81/100) learn more

The governments of oil-producing states receive a portion of extractive revenues through direct transfers. There are no conditions on how these transfers are spent and financial data are not published. However, the bulk of subnational transfers are made through the central government's normal revenue distribution processes. These transfers are based on population and economic needs and come out of the general budget, which combines petroleum receipts with other sources of national income. Information on these disbursements is published quarterly by the Finance Ministry.

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