New Energy Policy to Benefit All PlayersWed, 02/24/2016 - 09:22
Q: What are the main changes in the Ministry of Energy’s policy achievements since the Energy Reform, and which hurdles have to be overcome to make the Reform a success?
A: One of the most important contributions of the Energy Reform is the opening up of Mexico’s hydrocarbons and electricity sectors. A little over a year after its approval, it is generating structural changes that will lead to the increase of Mexico’s energy security and competitiveness. As a result, we can attract capital and state-of-the-art technology to make the most of our resources in a more efficient manner.
Another one of the government’s priorities is to guarantee the supply of natural gas, an input that the national industry uses in its productive processes to reduce production costs. Since the enactment of the Energy Reform, six gas pipelines have been concluded with seven more under construction, five have been awarded, four are under bidding, and eleven new projects are expected to be built in the next few years. With these new gas pipelines, natural gas will be supplied to the national power company, CFE, which is modernizing its generation plants to replace fuel oil and diesel.
Q: How has the creation of new agencies such as CENACE impacted the landscape of the energy sector?
A: As for power generation, the creation of CENACE is a landmark achievement. It will operate the wholesale electricity market from the start of 2016, and both public and private companies will participate under equal conditions. The Energy Reform provides opportunities for new public and private investments and brings Mexico up to date on international bidding practices and methods. For the first time in the history of Mexico, public tenders will be open to national and international companies. The Energy Reform established norms, institutions, weights and counterweights which guarantee the commitment of the State to competitiveness and transparency
Q: How will the Ministry of Energy ensure the availability of skilled labor, given the number of jobs expected to be created over the next four years?
A: With the opening up of the hydrocarbons and electricity sectors, qualified professional and technicians possessing the relevant knowledge and skills to face Mexico’s future challenges in energy matters will be required. In 2014, the Strategic Program for the Development of Human Resources in the Energy Sector was published. This program implemented mechanisms to best promote talent development, to identify training needs, and to enable inter-institutional coordination. This will all contribute to the development of a more competitive and dynamic energy sector. For this, more than 60,000 scholarships will be granted to technical, high school, and postgraduate students, existing educational programs will be adapted, and the development of scientific research, innovation, and technological modernization in Mexico will be promoted.
Q: How is the Mexican government seeking to enhance the overall competitiveness of oil and gas SMEs so they may benefit from the Energy Reform?
A: The opening of the energy sector to private investment will create new opportunities for the Mexican industry. The Reform promotes the development of suppliers and the strengthening of local production chains through the establishment of minimum national content percentages, which will increase from 25% in 2015 to 35% in 2025. These percentages will demand compliance from any contractors operating hydrocarbon-related projects in Mexico. Likewise, the state will give preference to national companies offering similar prices, quality, and timely delivery conditions. The development of suppliers will also be promoted by financing training programs, research, and the obtaining of certifications through the Public Trust to Promote the Development of National Suppliers and Contractors, which will be operated by the Ministry of Economy in coordination with NAFINSA.
This Trust has an initial budget of MX$200 million (US$13.3 million) for 2015, rising to MX$300 million (US$20 million) for 2016. Through this Trust, the direct participation of companies engaged in activities related to the energy sector will be promoted. Partnerships between Mexican and foreign companies will be encouraged, and we will seek an increase in the transfer of technology and of private investment between local and foreign companies.