Strengthening Local SMEs in Response to Incoming Competition

Q: How much communication has COPARMEX had with the government and other entities regarding the rules and legislation that have been passed since the Energy Reform?

A: There is constant communication with the government, mainly with the Ministry of Energy, the Ministry of Finance, and the Ministry of Economy. COPARMEX’s Energy Commission is comprised of members of the oil industry, which include the executive directors of Exxon, Mobil, Chevron, Shell, BP, Repsol, and other oil companies. There are also members in the natural gas, LP gas, electricity, and renewables sector. There is an important link between the Energy Commission and state governments, and we have state energy commissions in 20 states related to electricity, and the oil and gas industries. In COPARMEX we have 37,000 SMEs and 200 of the largest companies in Mexico are also members of the confederation. We see many opportunities arising from the Energy Reform and we wish to support companies and parties interested in making investments in Mexico.

Q: What have been some of the topics that have been debated in COPARMEX’s Renewable Energy Work Group?

A: We have a National Energy Efficiency Program that is being developed in conjunction with the Mexican Bank Association (ABM), Ministry of Energy, and FIDE. We want to promote self-supply projects and help SMEs gain access to cheap electricity generated from renewable sources. We also want to aid SMEs in getting financial support for equipment that would make them more energy efficient, so we will carry out efficiency studies in order to provide them with viable solutions. COPARMEX has been working with NAFINSA on a pilot project in State of Mexico, intended to help 40 companies by providing them with renewable energy. We will also help them obtain financial aid for any efficient equipment they might need.

We could decrease these companies’ electricity bills by 30- 50%. The annual amount each of these 40 SMEs pay for electricity amounts to US$10 million. CFE is pleased with this program since it will allow the utility to increase its capacity by lowering stress on transmission lines. Making these companies more competitive will enable them to compete on an international level.

Q: How is the advice COPARMEX giving to the public sector evolving as new companies enter the Mexican market?

A: Joint ventures between local and foreign companies will prove beneficial for national ones for a number of reasons; one of them is that the technology transfer will push local entities toward the cutting edge of innovation and state of the art technology. The formula for success is a combination of connections with key players and the appropriate knowledge. COPARMEX is also working with the government in developing a web platform where potential foreign investors can obtain all the information they need related to the private sector, chambers, and associations. This will help users initiate contact with the private entities that could prove to be valuable contacts. We are working together with the Ministry of Energy and the Ministry of Finance in order to develop a solution.

Q: What will happen when foreign SMEs come to Mexico and start competing with domestic SMEs?

A: Right now, we have to work on the financial aspect so that SMEs can access competitive credits. The national content clause in the Energy Reform was proposed by the private sector, and the COPARMEX Energy Commission suggested a section devoted to national content, which was drafted by the Ministry of Economy. The second subject in our proposal was to create two consulting boards for the oil and gas industry and for the electricity industry. The Ministry of Economy invited COPARMEX to formally create these boards at the beginning of 2015. In addition, we are promoting the creation of a national supplier and contractor registry. Companies that wish to register have to fill out a large amount of paperwork, and then it is possible to generate a number of qualified companies, so these companies can be linked with financing institutions that provide financing according to the companies’ rating and financial indicators. The organization that rates the companies is the one that links them with financial institutions. If a company wants to improve its own rating in order to obtain more funds, there is an opportunity to take courses, seminars, and training sessions for a wide array of subjects. This is the model we want to follow for our national registry to strengthen the Mexican SMEs.