A news commentary: Does the Mexican government believe in competition?

Houston — March 12, 2013

The news that the government is getting tough with monopolies in the telecommunications sector is no cause for celebration in advance of a reform in the energy sector. In the first place, by virtue of Constitutional Article 28 (4th paragraph), it is stated that hydrocarbons and electricity are not to be considered monopolies. So, by definition, there is no CFE monopoly in electric power that should properly come before anti-monopoly reformers. Ditto for Pemex.

But what about the future? Is competition being thought about for the energy sector? (In Spanish, “competencia” means two very different things: competence and competition.)

Here is what I found this afternoon in examining the National Energy Strategy for 2013-2017: A document search produces three finds for “competencia”: one in the meaning of “competence” (the competence and efficiency of the regulators must be strengthened), a second in reference to “competition” among suppliers of various financial and technical services to the energy sector (whose ability to compete with international providers must be strengthened), and a third to the “global competition” among manufacturers of green technology. http://www.energia.gob.mx/res/PE_y_DT/pub/2013/ENE_2013-2027.pdf

Nowhere in the document is the idea expressed that there should be competition among energy providers (as in electricity, natural gas, crude oil and oil products). This idea is entirely missing, which tells us that non-cosmetic energy reform in Mexico is still years away, or so it seems.

A curious detail is that the approval of the document was by a show of hands by the appointed members of a National Energy Council. A secret ballot would have offered advocates of market solutions to energy supply an opportunity to have voted against approval. http://www.sener.gob.mx/portal/Default.aspx?id=2384

In my imagined capacity as Consejero Internacional Independiente of Pemex’s Corporate Board, I certainly would have cast a negative ballot.

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Mexico Energy Intelligence

Baker & Associates offers niche-market business and policy intelligence related to Mexico's oil and gas, power and chemical industries. Over 1,000 reports have been issued in the last 20 years. Subject matter expert and publisher George Baker, who directs the firm, has carried out consulting assignments starting in the late 1970s at the height of the Oil Boom in Mexico. He brings bilingual and bicultural skill-sets to understanding and responding to challenges of business and public policy, coupled with a deep familiarity with the history and idiosyncrasies of the Mexican operating environment.