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Guatemala Wants to Change Its Constitution to Allow Oil Drilling and Mining

Article Summary:

Guatemala is proposing a constitutional amendment to allow the State of Guatemala to have the right to earn up to 40% of the assets of companies which exploit non-renewable natural resources in the country. The proposed amendment covers both oil drilling and mining.

Photo Credit: El Periodico

Original Article Text From El Periodico via Google Translate :

Government Could Participate in Mining and Oil Capital

The team developing the proposed constitutional amendments proposed to the President Otto Perez reform of Article 125 of the Constitution, which would allow the State of Guatemala have the right to participate in up to 40 percent of the assets of the companies that exploit resources non-renewable, covering the mining and oil companies.

This suggested the creation of a specific law to regulate this right. In countries like Bolivia and Argentina have specific legislation that regulates mining companies mixed (private and state are participating).

The proposal of the remarkable group of seven, which was filtered elPeriódico, suspicion generates the mining sector. Some lawyers consulted, who asked not be quoted, believe the move could be unconstitutional because it requires a private company to accept the government as a shareholder, but would the projects viable.

Mario Marroquin, president of the Union of Extractive Industries (Gremiex), said that there are other legal tools that could use the state to secure more resources, there should be constitutional matters.

“The best way to secure resources is through taxes, how it works in Guatemala, but the Guild is understood that it is a sovereign decision and all comply with the law,” said Marroquin.

He added that “the proposal should be carefully considered, as this could lead to a detriment of investment.”

Standard antitechnic
Roberto Villeda, president of the Center for Defense of the Constitution (CEDECON), believes that constitutional norms should be comprehensive and the regulatory proposal is therefore becomes antitechnic by attempting to regulate the Constitution. The constitutional norms must overcome the political situation, she said.

They propose a sovereign fund
The proposal includes a reform of Article 242, the Guarantee Fund, to create a sovereign fund to invest in public works in the long run. This fund is financed by annual contributions of state resources from state-owned companies that exploit natural resources and the privatization and concession of public service companies.

Around the world there are similar as sovereign wealth funds in Abu Dhabi, United Arab Emirates, considered one of the largest in the world, Norway’s oil resources, and Chile with copper revenues.

This fund would work, said Marroquin, if local production surpluses left. This works in the Nordic countries, but so far in Guatemala do not have to stop production surplus extraction.

Link to Original Article:

From El Periodico

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