Philosophy of the Biddable Variable: Why the Bidder’s Work Program is Important
This issue brief proposes a framework for awarding bids in a public tender for exploration blocks. The context for the proposal is Mexico’s energy reform of 2013-2014. For the first time since 1958, a new oil regime has been put in place that allows for competition in the award of an exploration block. Said differently, the new oil regime allows for the award of a block to an oil company other than Pemex. My basic argument is that alongside the potential revenue benefits of an award, the state should give equal attention to the collateral and cascading effects of a bidder’s proposed work program. As a heuristic exercise, I offer an imaginary scoring in a public tender of seven bids for an exploration block (Table 1). Before turning to that table, however, consideration should be given to the public policy framework in which such a scoring system would make sense. Rightly understood, the requirement to balance revenue concerns with other economic benefits of a nonmonetary character should be exercised with a wide appreciation of the potential multiplier effects of oil reform. In contrast, the application of a rent-seeking bidding criterion will damage the interests of the state and discourage top-tier oil companies from participating in public tenders.
Citable link to this pagehttp://hdl.handle.net/1911/92496
Link to Baker Institute Research Libraryhttp://www.bakerinstitute.org/research/philosophy-biddable-variable-why-bidders-work-program-important/
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- Mexico Center