Sheinbaum Explains Integration of CRE and SENER Amid Budget Cuts

President Claudia Sheinbaum detailed the integration of CRE into the Ministry of Energy (SENER), signifying the end of CRE as an autonomous entity. In her morning press conference, Sheinbaum explained that this move is part of her broader administrative reform aimed at “streamlining government operations.” While CRE will maintain technical independence, it will no longer have full autonomy, particularly regarding budget allocation.

“It is not the same for an autonomous body to have total independence, including budgetary freedom, and to decide how much budget they need and how to spend it,” Sheinbaum stated. She emphasized that technical independence will remain, ensuring transparency and technical criteria in the allocation of permits, but without financial self-governance.

Moreover, the government has proposed a 30% budget cut for CRE and CNH for 2025. According to the 2025 Federal Expenditure Budget (PEF) project, this represents a reduction of MX$159.9 million (US$7.834 million) from the 2024 budget. Collectively, both agencies will receive a total budget of MX$373 million, with CRE seeing a decrease of MX$85.6 million to MX$199.8 million, and CNH experiencing a reduction of MX$74 million to MX$173.2 million.

This budget cut comes amid the ongoing legislative discussions concerning a potential reform that would dissolve both CRE and CNH, integrating their functions into SENER. The vote on this reform was delayed as legislators are also considering changes to other autonomous entities such as the Federal Economic Competition Commission (COFECE) and the Federal Telecommunications Institute (IFT).

If the reform is approved, CRE and CNH’s budgetary resources may be reallocated to SENER, which will then oversee their regulatory functions. 

Experts warn that the dissolution of CRE could lead to a decline in investments in the energy sector, as companies may exercise caution in allocating capital amid regulatory uncertainties. However, the government is aware of this potential negative impact and aims to mitigate it through secondary legislation. Maintaining a level playing field for all market participants will be crucial in this transition.

Despite the regulatory changes, it is essential that the administrative functions and regulations continue uninterrupted to provide certainty to the sector. Following the approval of the regulatory body's dissolution, Congress would have 90 days to pass secondary legislation and amend the Hydrocarbons Law regulations to ensure a smooth transition.