Tuesday, November 28, 2023

Pemex domination worries business group; AMLO calls it a just move

A powerful business group has expressed concern about the decision by the Energy Regulatory Commission (CRE) to revoke a regulation that restricted Pemex from selling wholesale fuel below cost or well above market prices.

The decision “seriously affects free competition in the oil market in Mexico, generates uncertainty and violates the trust of investors and final consumers,” the Business Coordinating Council (CCE) said in a statement.

“. . . Pemex can now exercise its dominant position in the sale of hydrocarbons without any restriction. Although the federal government had committed not to introduce changes in energy regulation, this measure is a new change to the rules of engagement . . .” the CCE said.

The business group charged that the state oil company will now be able to sell fuel at “discriminatory prices” without any intervention from authorities.

In other words, it could sell gasoline and diesel to Pemex-branded gas stations at cheaper prices that those at which it sells to private companies, creating an uneven playing field.

The CCE said the CRE decision “creates a climate of uncertainty in the existing regulatory framework, destroys legal certainty, affects the investment climate and inhibits the participation of more service providers [gas stations]” in the retail fuel market. The business group urged energy authorities to reconsider the decision.

At his regular news conference on Thursday, President López Obrador defended the CRE’s decision and denied that it was a threat to private businesses, which were able to enter the fuel market as a result of the previous government’s energy reform.

The decision was taken so that Pemex “can compete on equal terms,” he said, asserting that the state oil company lost that capacity during the previous federal administration.

“The objective was to disappear Pemex and the CFE [Federal Electricity Commission]. What the regulatory authority is doing is acting with justice, what it’s doing is not illegal . . . ” López Obrador said.

The president also expressed support for a federal court ruling that said Pemex is not obliged to allow private companies to use its pipelines and storage facilities.

“They [the previous government] wanted . . . the private sector to use Pemex pipelines . . . that’s not equality. A lot of excesses were committed because the aim was to put an end to the two public companies in order to leave the market to private companies but we have to find a balance – to guarantee prices above all,” López Obrador said.

“You can’t only continue betting on the market and seek to dilute [the role of] the state. To that freedom, [I say] no because it’s like the freedom of the fox in the henhouse, there has to be order and consumers have to be defended, that’s the role of the state.”

Source: Reforma (sp) 

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