CRE’s Permit Restriction Will Paralyze the Energy Sector: AMPES
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CRE’s Permit Restriction Will Paralyze the Energy Sector: AMPES

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Eliza Galeana By Eliza Galeana | Junior Journalist & Industry Analyst - Tue, 03/21/2023 - 07:49

The Mexican Association of Service Station Suppliers (AMPES) stated CRE’s recently imposed restriction on hydrocarbons and electricity permits will paralyze the energy sector’s growth. Moreover, the Business Coordinating Council (CEC) said that the agreement once again favors CFE and PEMEX over their private sector competitors.

On Feb. 28, 2023, CRE announced an agreement to resume the procedures regarding permit approvals, which were suspended due to the COVID-19 pandemic. The document published in the DOF, the official gazette, pointed out that the commission would only admit a reduced amount of permits per month, accounting 50 for hydrocarbons, 120 for pre-registration and 15 for electricity. The news had a mixed reception: some were happy to see activities resumed albeit in a restricted form, though other energy sector specialists deemed the measure to be insufficient.  

AMPES emphasized that limiting permits in such a way would paralyze the growth of the sector. “This will discourage investments at a time when the energy sector is the lever of the national economy,” the association said. Additionally, AMPES highlighted that the application of Agreement A/004/2023 may lead to barriers to free competition, as well as non-compliance with the deadlines and terms established in energy transition legislation. This, in turn, can lead to the judicialization of the agreement to promote the efficient development of the energy sector.

According to AMPES, as of February 28, 2023, there is a backlog of 9,963 unsolved permits: 7,887 correspond to hydrocarbons, 858 to electricity and 1,218 to pre-registration procedures. This means that by following the pace of the new agreement, only 15% of the accumulated hydrocarbon applications will be cleared in two years. 

The association underscored that in addition to the backlog of procedures to be evaluated by the CRE, a considerable number of new applications will be added, which are indispensable for the development of the energy sector. “The realization of these projects is essential for the productive investments they represent for the country," it added. AMPES pointed out that the supply sector for gas stations represents 82% of SMEs that employ families throughout the country.

CEC called for the amendment of the agreement following the current legal framework and the creation of an efficient and transparent system of deadlines that could drive dynamic competition in the Mexican energy sector. The council stressed that the agreement intends to maintain a monopoly by state-owned energy companies PEMEX and CGE over Mexico’s oil and electricity market. “These actions artificially obstruct the procedures for investments in this sector and contravene the commitments made by Mexico in the framework of the USMCA treaty,” the CEC statement reads.

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