Business Leaders Stand Ready for the Energy Reform

Q: How does the Energy Reform compare with what COPARMEX proposed in 2013?

A: We have maintained strong communication with the government throughout the process, including having workshops with SENER and SHCP. There is no doubt the Energy Reform is a successful reform and we now have to change the rules of the game. The secondary laws are the next step as the Energy Reform is not a finished piece of work. The passing of the secondary laws will be different as private interest groups will work to influence regulations and maintain or improve their positions. Regarding the secondary laws, we want Mexican SMEs to be provided with the necessary tools to compete with neighboring countries, such as the US and Canada, and successfully offer services to the energy sector. In order to compete in a fair and equitable way, we need to establish fair financing schemes.

Q: How can SMEs prepare themselves for increasing competition in the energy sector?

A: COPARMEX is associated with 35,000 SMEs and a lot of these provide services to the energy industry. In the state of Tabasco alone, we have 2,000 small and medium sized companies that cater to PEMEX, particularly through maintenance and construction services. We are certain that the best way to allow these companies to grow is through financing. Currently, for SMEs to identify projects and act on them, they need to have spare capital to finance the first 90 days of a project, as payment transfers take between 40 and 60 days. Very few financial institutions are already financing SMEs, and even then, credit rates remain high.

Q: How is COPARMEX helping these companies make the right decisions regarding the financing they seek?

A: First, we must assess regional capacities because we cannot establish a national content strategy that does not reflect the specific characteristics of certain regions. We need to identify the projects to be developed as deepwater extraction is not the same as extraction from current mature fields. The same goes for building a thermoelectric power plant or a pipeline. We need to assess regional capacities to identify the right percentage of national content. We must also end a culture whereby large firms hire service providers and offer low payments which are issued late, causing problems for SMEs. It is also important to develop Mexican engineering with a long-term vision that will satisfy the coming national demand. In that regard, we hope that the Energy Reform will bring about a more established curriculum for Mexican engineering and academic centers. Mexico has enough engineers, but it needs more engineers specialized in the upstream and downstream oil and gas industry. Aa a consequence of this, Tabasco has become home to a growing Venezuelan community because the job opportunities there cannot be filled by local professionals.

Q: How will COPARMEX represent its members’ interests during the implementation of the Energy Reform?

A: Certain benefits for Mexican companies, which means companies established in Mexico that create jobs and revenues regardless of their stakeholders’ place of origin, have already been clearly defined. COPARMEX has an area specialized in hydrocarbons, as well as areas devoted to natural gas, electricity, and renewable energy. We have a presence in all Mexican states, including those that are deeply involved in the oil industry, those with unexploited fields, and states that need fuel, gas, or electricity to develop their industries. COPARMEX promotes the creation of energy commissions in different states to liaise better with state governments.

Although the business sector is pleased with the Energy Reform, we are also concerned about the timeframes involved. These are rather short for the magnitude of the decisions that must be taken within this period. The development plan that will govern the oil and gas industry for decades to come is being developed in six months. This is a delicate subject for such tight timeframes. COPARMEX is willing to offer the best resources at its disposal to contribute to the development of the public policies Mexico needs. We need to give companies the tools to grow, locally and globally. We hope Congress will leave populist decisions behind and embrace a larger national perspective. We will be supervising the contracting process to make sure that the forthcoming contracts are assigned with transparency and in accordance with the anti-corruption practices defined by President Enrique Peña Nieto and CEO of PEMEX Emilio Lozoya Austin.