Mexican Senate passes electoral bill, clearing way for energy debate

MEXICO CITY (Reuters) - Mexico's Senate on Tuesday overwhelmingly approved an electoral reform demanded by the opposition, helping pave the way for Congress to focus on an energy bill at the center of President Enrique Pena Nieto's economic agenda.

Senators voted 106-15 with one abstention to approve the bill in general, but dozens of points were reserved for further debate that was expected to stretch into the night.

The bill, which would allow lawmakers to serve consecutive terms in office and curb the power of the presidency, will then go to the lower house, which is expected to give it final approval in the next few days.

Opposition conservatives demanded passage of the electoral legislation before they would provide their support for an energy bill that would open the state-controlled oil sector to private investment.

Mexico's peso rallied on Tuesday after the leader of Pena Nieto's Institutional Revolutionary Party (PRI) in the Senate said that lawmakers could turn to the energy bill as soon as the political reform was approved.

Further boosting the peso, prominent Mexican leftist Andres Manuel Lopez Obrador was hospitalized with heart trouble, reducing the likelihood that he will be able to lead street protests against the energy plans.

DEEPER ENERGY REFORM?

The leftist Party of the Democratic Revolution (PRD), which is opposed to opening the oil sector to private investors, withdrew from a cross-party pact last week, raising hopes that PRI lawmakers and conservatives will pass a far-reaching energy reform.

To reverse almost a decade of declining crude output, Pena Nieto proposed to open up the state-controlled oil sector to allow private investors to team up with oil monopoly Pemex and share in profits of exploration and production.

That bill forms part of a package of reforms encompassing efforts to open up the telecommunications sector, improve bank lending and strengthen the tax collection, which the government hopes will help boost growth in Latin America's No. 2 economy.

The conservative National Action Party (PAN), the PRI's natural ally on the energy revamp, is pushing for more lucrative contracts to be offered, such as concessions, and lawmakers say they are exploring options for a deeper reform.

Long the dominant force in Mexican politics, the PRI lacks a majority in Congress and needs PAN support to pass the energy bill, which is expected to happen later this month.

The PAN has made its support for the energy overhaul conditional on the electoral reform passing first. The electoral reform sets out rules for coalition governments and aims to strengthen Congress at the expense of the president.

In 2000, the PAN succeeded in ousting the PRI from power after 71 years of uninterrupted rule.

When Pena Nieto recaptured the presidency last year, opposition parties resolved to use their leverage in Congress to weaken the PRI's grip on the Mexican political system.

The bill would also empower electoral authorities to annul elections if the winner exceeded campaign spending limits. Pena Nieto was accused by Lopez Obrador and the PAN of grossly overspending in his campaign.

Senators, whose terms last six years, and lower house deputies, who serve three, will be allowed to sit in each respective chamber of Congress for up to 12 years.

At present, Mexican federal and state lawmakers cannot be directly re-elected to the same office. The reform foresees no change for the president, who can only serve one six-year term.