Is Mexico’s govt undermining the energy reform?

A leaked internal email from Mexico’s energy regulator, CRE, suggested to limit the sale of fuels that are not linked to state company Pemex.

Local daily El Financiero reported earlier this week that CRE’s deputy director of public sales, Rafael Leyva Mora, sent an email to employees on April 24, saying "starting today, only the granting and updating of permits to sell Pemex by-products will be accepted."

The report sparked outrage, even as prices plummet at gas stations due to the global oil price crash and market liberalization.

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A public relations representative from CRE has denied knowledge of the email or its content when contacted by local outlet El Heraldo de México.

But the denial could not stop the anger coming from several business corners. National fuel sales association Onexpo even demanded CRE adheres to the law.

"With a measure of this nature, unfair competition begins against the more than 70 brands other than Pemex and especially puts into question the investments in the sector of those who have decided to develop infrastructure," Lexoil managing partner Marcial Díaz Ibarra was quoted as saying by Oil and Gas Magazine.

Some actors suspect the possible CRE move forms part of efforts by the López Obrador administration to undermine the 2014 energy reforms that opened gasoline sales to competition.

"Gasoline prices fall due to competition between the different gasoline brands, but private participation is still limited, as the authorities have undermined support for investments and the issuance of permits," according to Jaime Williams, coordinator for oil industry affairs at major employer association Coparmex.

"Unfortunately, (the regulator) is holding private companies hostage, delaying permit applications and updates, and delaying transfers of permits from private service stations," he was quoted as saying by industry outlet Energía a Debate.

Also, energy ministry Sener has complicated the granting of import permits for private and international companies, reducing competition to the detriment of consumers, Williams said.

"This, rather than affecting large national or transnational groups, affects the small Mexican businessman, who sees advantages in changing brand, price and quality to better serve his clients, and the consumer, by not allowing to choose between brands."

Latest numbers from Onexpo show that 12,551 service stations operated in Mexico in February. Of these, private brands operate 2,470 and Pemex the rest.

Antonio Roldán, CEO of Oilnova, a company specialized in opening private gas stations in Mexico, said in an interview to daily El Norte in February that private owners could control over half of the local retail fuel market.

"If we calculate that within almost two years the companies began to arrive and Pemex has already lost 28% of the market because it has not had the capacity to compete with the companies that are new, it will lose at least 50% at a rate of two years, maximum three."