Mexico

EITI Status Yet to be assessed against the 2016 Standard
EITI Member Since 2017
Website EITI Mexico

Status of Mexico

The Government had confirmed its intention to join the EITI in January 2015. The EITI Board has approved Mexico’s EITI candidature application at the Board meeting in Manila in October 2017.

Overview

Mexico is the second largest economy in Latin America. Mexico's $2.2 trillion economy has become increasingly oriented toward manufacturing while the extractive sector still is the single most important sector. According to the IMF, natural resources account for 15% of total exports and contribute with 36% of total revenues. Mexico has 0.5% of the world's total oil reserves.

In 2013, Mexico passed a constitutional reform to allow, for the first time in almost a century, private investment in the Mexican oil and gas sector. One of the central aims of the reforms was to bring transparency to how the sector is managed. From awarding licenses to collecting revenues from the companies to the use of those revenues, the reforms sought to embed transparency in government practices and systems. Since 2016, Mexico has conducted a series of bidding rounds to allocate oil and gas blocks.

The EITI addresses a range of issues relevant to the outlook for the oil, gas and mining sectors, including license allocation, production data, tax transparency, the role of state owned enterprises, and the allocation of the revenues, including to the recently created Mexican National Oil Fund.

The Natural Resource Governance Institute (NRGI)'s 2017 Resource Governance Index has ranked Mexico as satisfactory. More details are available here for mining and oil and gas.

 

Implementation

EITI-Mexico started to implement the EITI Standard on October 2017. The multi-stakeholder group has created two working groups to propose the scope for the first EITI reporting exercise in two areas: core financial flows and social and environmental coverage.

Scoping of financial flows is in progress. Initial findings indicate that a) in the hydrocarbon sector three revenue streams account for around 97% of total revenues. These are Rights to shared profits (DUC, for its acronysm in spanish), Rights to hydrocarbons extraction (DEXTH, for its acronysm in spanish) and Coporate tax (ISR, for its acronysm in spanish). In the mining sector, Corporate tax and mining rights and Special mining rights are the three largest revenue streams representing around 95% of total revenues generated by the sector. 

Social and environmental coverage is an innovation agreed in EITI-Mexico's work plan. EITI-Mexico commisionned two background notes on a) Social issues to be included in the EITI and b) Environmental regulations and payments to be considered in the EITI.

Other documents prepared in advance of implementing the Standard include:

- Mining legal and fiscal regime, contracts and economic contribution

- Hydrocarbon legal and fiscal regime, contracts, state participation and economic contribution

Contract transparency

The hydrocarbons regulator CNH (Comisión Nacional de Hidrocarburos) has worked with the Natural Resource Governance Institute (NRGI) in identifying the best practices for transparency in contract management.

See the recommendations here.

Beneficial ownership disclosure

By 2020, all EITI countries have to ensure that companies that apply for or hold a participating interest in an oil, gas or mining license or contract in their country disclose their beneficial owners. The EITI Standard also requires public officials – also known as Politically Exposed Persons (PEPs) to be transparent about their ownership in oil, gas and mining companies.

The government of Mexico has committed to map and identify beneficial ownership of the companies operating in the country and explore the methodology and extent of contract transparency. Mexico submitted its beneficial ownership roadmap as part of the candidature application in September 2017.