Mexican regulator may be looking at new suspensions of fuel sale permits

Mexican energy regulator CRE is expected to issue new permit suspensions in the coming months akin to those published in the official gazette in mid-May.

According to a source familiar with the matter, the CRE is conducting an internal auditing process looking for permits that fail to comply with requirements, have missed payments for rights or are not being used by their holders.

The objective would be to issue new large-scale permit suspensions akin to a previous agreement approved by the CRE in late April that suspended 139 fuel sale permits as the regulator considered that they were unused for over a year, BNamericas was told.

The previous suspension, which included natural gas sale permits belonging to big players in the energy sector, is currently being evaluated by federal courts, as some players have filed appeals against the measure.

The news comes in the midst of a legal battle over the fate of a new reform of Mexico’s hydrocarbons law that would make it easier for CRE and energy ministry Sener to suspend and cancel midstream and downstream permits.

Last month, federal competition courts issued several permanent suspensions of the hydrocarbons reform. Together with controversial changes to the electricity law, the reforms were fast-tracked through congress in a bid by Mexico’s government to bolster public utility CFE and NOC Pemex through sweeping changes to energy sector regulation.

The ultimate fate of the changes is likely to be decided by the supreme court. 

As BNamericas reported previously, the results of Mexico’s midterm elections last Sunday drastically reduced the likelihood that the government will be able to pursue constitutional changes if proposed reforms of the energy sector are struck down by the courts.

Another CRE-related legal controversy was sparked earlier this month when competition watchdog Cofece presented a constitutional complaint to the supreme court to ask whether CRE is allowed to block mergers or acquisitions within the energy sector that have been previously approved by Cofece.

An authorization requested by Trafigura to merge some of its subsidiaries with TP Terminals, a JV with competitor IEnova, was denied by the CRE on March 18 even though it had previously been evaluated by Cofece, which gave a favorable recommendation on the merger.