Predicting the Impacts of the Energy Reform

Q: In which ways does the Energy Reform help align Mexico’s economic, social, and environmental development ambitions?

A: The energy sector is one of the main drivers for Mexico’s development, and the Energy Reform changes the country’s operating framework to achieve the national goals for economic, social, and environmental development established by the federal government. The Energy Reform gives Mexico more energy security and allows for the better use of national resources to ensure a continuous, diversified, and economic energy supply for this generation and those to come. The role of the government as a regulator of the electricity and hydrocarbons industries will be enhanced, as it will have new tools to define and carry out energy policies which will enable an appropriate and wise management of the country’s energy resources.

Opening the doors to new players in the hydrocarbons sector will maximize oil revenues, favoring social programs and funds that will benefit future generations. The number of competitors in the power generation market will increase and the private sector will be able to participate in transmission and distribution activities. The hydrocarbons sector will also be open to private investment, promoting the increase of natural gas production, which is the most important transition fuel as it is cheaper and cleaner than fuel oil and diesel. The increase of natural gas supply, along with the increase in productivity, will allow electricity bills to become cheaper. Affordable natural gas will allow companies to develop their production chains, fostering our country’s industrialization process and creating jobs for the Mexican people. This, coupled with increased natural gas availability, will significantly reduce electricity tariffs. The Energy Reform will help achieve inclusive development that will democratize productivity and the quality of life in the different regions of the country, generating 500,000 additional jobs by 2018 and more than 2.5 million by 2025. Approximately, it will lead to an additional 1% of economic growth by 2018 and 2% by 2025.

Q: What role will the creation of new regulatory agencies such as the National Center of Natural Gas Control

(CENAGAS) and the National Energy Control Center (CENACE) play in the opening of the energy sector?
A: These public organisms will guarantee open access to transportation networks and create a level playing field for the different actors involved. CENACE will be in charge of supplying power plants according to their demand and determining the technical requirements for power plants seeking interconnectivity to the transmission and distribution grid. In a similar way, CENAGAS will manage and coordinate the pipeline network and gas storage. With clear rules and strong organisms in charge of controlling the pipeline network and the National Energy System, private companies will have the legal certainty they need to invest in Mexico.

Q: What are the main targets against which you will benchmark SENER’s achievements at the end of the current presidential term?

A: The results of the Energy Reform will be evaluated and compared to the indicators of the goals established. These indicators will cover several important areas. We will compare the current number of jobs in the energy sector, and the entire Mexican economy, with those achieved at the end of the presidential term. This same basis for comparison will also be used to look at the amount of investment in the sector, the prices of different energy sources, and the general population’s access to electricity. Each of these indicators will allow us to see how well our goals have been met, and when put together they will offer a complete picture of how far we have come since the Energy Reform. At the beginning of this administration, we noticed the precarious situation which the energy sector was immersed in. It was clear that we could not wait any longer to make the major structural changes that were needed.

The current administration’s legacy will be passing a complete Energy Reform that will allow the power sector to obtain the financial and technological resources to optimize activities in the hydrocarbons and electricity segments. We know this Reform will mark a new era of industrialization that will promote the country’s economic growth and social well-being.