CRE Lacks Capacity for Verification Processes

CRE is currently encountering difficulties in effectively monitoring the country's energy market. Norma Leticia Campos, Commissioner, CRE, in an interview with Bloomberg Línea, highlighted the constraints faced by the regulatory authority in adequately inspecting regulated companies due to a lack of personnel. This situation raises concerns about the enforcement of regulations and the efficient functioning of the energy sector in Mexico.

CRE is responsible for overseeing a wide range of activities within the energy sector. It manages approximately 24,500 permits issued to both public and private companies engaged in activities such as oil and gas, LPG, fuels, petrochemicals, bioenergy, as well as electricity generation, supply, imports and exports. With nearly 10,000 pending procedures awaiting voting, including 7,887 related to hydrocarbons and 858 concerning electricity, along with 1,218 in the pre-registration process, the workload faced by CRE is substantial.

In 2022, the delay in permit processing led to growing dissatisfaction among Mexico's key trading partners, particularly the US and Canada, resulting in an energy dispute.

Despite conducting 347 verification visits pertaining to natural gas, LPG and petroleum, as well as 48 visits to companies operating in the electric industry, CRE’s overall inspection capacity remains inadequate. With 13,000 gasoline stations spread across 32 entities, CRE only conducted 235 verification visits throughout the previous year. Moreover, reports from other CRE commissioners have also surfaced, highlighting irregularities in the permit processing system.

Another concern highlighted by Campos is the persistent problem of gasoline theft. CRE's limited capacity to enforce rigorous inspections due to a shortage of verifiers has hindered its ability to effectively combat this issue. While PEMEX has made strides in reducing fuel theft since the start of the current presidential term, the NOC has suffered an average daily loss of 5,700b of gasoline and diesel, amounting to MXN$7.1 billion (US$350 million).

To overcome the challenges posed by insufficient verification, Campos emphasized the need for CRE to have greater financial autonomy. This would enable the commission to hire additional personnel and enhance its inspection capabilities. By bolstering its workforce, the commission could effectively monitor and enforce compliance within the energy sector, ensuring that regulations are adhered to and energy-related activities are carried out transparently.