David Penchyna
President
Energy Commission of the Senate
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View from the Top

First Seedling of the Energy Reform

Wed, 02/24/2016 - 16:18

Q: What have been some of the achievements of the Senate’s Energy Commission, and what are its new objectives?

A: I can proudly claim that the achievements of the Senate’s Energy Commission have no parallel in recent legislative terms. Constitutional Articles 26, 27, and 28 were modified, thus enabling the Mexican electricity industry to become an open market. After these Constitutional Reforms, several secondary legislations and bylaws were issued to regulate, among other things, private participation in the production chains of hydrocarbons and electricity production and commercialization. We paid attention to all the voices and opinions regarding the possible modalities of the Energy Reform, while disseminating the Constitutional Amendment as much as possible so that citizens could be aware and informed about the meaning and implications of the legislative reforms.

The Senate is not in charge of the administrative application of the approved legislation. However, our responsibility entails constantly overseeing the public administration’s application of the reforms. We demand constant information about the advancements and achievements with the aim of directing the implementation of the objectives set by the Reform.

Q: What tools are being given to CFE and PEMEX so that they can overcome the obstacles in their journey toward becoming productive enterprises of the State?

A: The transformation of PEMEX and CFE from decentralized organisms to productive enterprises allows for more administrative and financial autonomy in both companies’ operations. Proof that these companies took the right path is already evident in the fact that CFE is performing more efficiently, which has reduced electricity tariffs, particularly for the national industry. It is obvious that this transformation cannot happen overnight, as it implies a thorough restructuring of both companies, enabling them to simultaneously become more competitive and attractive enough to receive future investments.

Q: What are the key elements in ensuring that the new operative framework creates a level playing field for the private sector?

A: By becoming a new player in the global energy market, Mexico will have to compete for investments on an international level. This will force the Reform’s implementation and measuring mechanism to attract the needed capital, while considering that Mexico is lagging several decades behind other open markets. The progress of these national markets will be delayed due to the nature of these developments. In the concrete case of CFE, significant investments are already in place, which will foster the development of a wholesale electricity market that will allow the diversification of the country’s energy matrix.

Q: How is the Senate working to ensure the success of the Energy Reform?

A: The Senate is already participating actively in the implementation of the Energy Reform. Our job is to identify, suggest, and perfect the application measures that will allow the country to obtain the most profit from the decisions made in the energy sector. Changes and results, particularly in the hydrocarbons sector, will not be seen in the short term because of the nature of the projects. The Energy Reform was devised with future generations in mind, who, in spite of the market’s volatility, should adopt a positive outlook on economic prosperity for public finances, the private sector, and consumers in general.