V. Structural Reform Policy

Given the nature of the structural reform and deregulation policies that have been put in place, it is expected that the benefits of the implementation of a structural reform policy will materialize in the medium-term.

The legal and regulatory changes that have been made during this Administration, will result in 10.7 billion dollars of investment commitments in 1996.

In 1997 Mexico will continue the deepening of structural reform policies in the following sectors:

Telecommunications:

- Long distance: Competition will start in January, 1997 in the major cities of the country.

Results of the Concession Processes of Long Distance Services

*/ Miditel’s investment corresponds to the 1996-2001 period.

- Public and local telephone services: Concessions will be granted to promote new services.

- Rural telephone services: The implementation of new technology will promote rural services in low population regions.

- Radio spectrum: The bidding processes will begin for concessions in paging, microwave links, UHF and VHF for radio communication, PCS, restricted TV, etc.

- Satellites: The regulation process that will enable the beginning of the privatization will be concluded.

Toll Roads:

- New schemes for concessions will be introduced to promote private participation.

Railroads:

- The winner of the concession for the Noreste line will be announced in December, 1996. The bidding process will continue for Pacifico Norte, Sureste and others. For year-end 1997, most of the railroad service will be concessioned.

Airports:

- The first invitations for the bidding process and the procurement guidelines will be published before year-end 1996. The new scheme will enable to begin awarding concessions in 1997.

Ports:

- The process of divestiture and private sector involvement will continue:

»Integral Port Administrations (APIs): Mazatlán, Topolobambo, Tuxpan.

»Multiple Use Terminal (TUM): Ensenada.

»Railway services: Ensenada-Tecate, Tijuana-Tecate.

»Towing services: Coatzacoalcos, Lázaro Cárdenas, Manzanillo, Veracruz, Tampico/Altamira, Ensenada, Guaymas, Progreso.

Oil sector:

- Investment will increase by 56.4 % in real terms. Key projects for 1997 are Cantarell, Tabasco, Burgos and Cadereyta.

Petrochemical:

- Through the new strategy implemented for the development of the industry, private investment will participate independently or in association with Pemex.

Natural Gas:

- Distribution: The bidding process for eight more cities will take place, starting with Toluca.

- Transportation: Bidding processes for Merida III, Rosarito, Chihuahua-Samalayuca and Palmillas-Toluca will continue.

Power Sector:

- In the next few months the bidding process for the following plants will start: Monterrey, Rosarito and Cerro Prieto and Chihuahua and other power generation programs as well as a number of significant projects for construction of transmission lines.

1/ Given that there is a free-floating exchange rate regime, these numbers cannot be depicted as exchange rate projections. However, for the purpose of calculating some items of the budgetary data, these were the references. In the Economic Policy Guidelines for 1996, and exchange rate of 7.70 was used, while as November 5, 1996 the average exchange rate was 7.55 pesos per dollar.

2/ A price of 13.25 dollars per barrel was assumed for the Mexican crude oil export mix in the Budget for 1996.