Mexico's public-private energy contracts must balance risk and return - CCE

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Tuesday, July 15, 2014

Mexico's energy reforms must ensure that contracts between state oil firm Pemex and the private sector strike a balance between risk and return, promoting competition and efficiency in investment, according to the country's business coordination council (CCE).

The reforms are a priority for the country's economy and the debate of the legislation must be expedited to move on to implementation and the investment phase, the council's president Gerardo Gutiérrez Candiani said in a statement.

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He expressed his confidence that Mexico's legislators are up to the challenge of consolidating the reform, responding to the proposals that have come from society, academics and businesspeople responsibly in order to support the legislation.

The senate's energy and legislative studies commissions are currently voting on the proposed laws to govern the country's energy reform. The legislation will then pass to the full senate for debate and is expected to be approved in August.

"The technical review of the package's details is crucial, as the proposed laws are congruent with the constitutional reform, but contain elements that can be improved, corrected or clarified," Gutiérrez Candiani said.

"It is fundamental that the reform's legal framework provides certainty for all the energy sector's participants, as well as equality, so that there is a market of real competition in which Pemex and state-owned power utility CFE participate alongside the private sector."

For this, it is necessary that the sector's regulatory bodies, such as the energy regulatory commission (CRE) and the national center for gas control (Cenegas), enjoy autonomy and the necessary technical and legal faculties to work effectively, he said.

The reform brings the challenge of consolidating a strategic energy sector, based on a complementary public-private participation, subject to an effective framework of evaluation and transparency.

The significant participation of domestic firms must be guaranteed to spur their growth, particularly small and medium-sized companies, to make the reform an engine of regional growth through the construction of local and national chains of production, he said.

Regarding the electricity sector, it must be ensured that the CFE does not enjoy unequal advantages over other competitors, and that there is no intervention on behalf of the authorities in the setting of prices, he said.

BNamericas will host its fourth LatAm Power Generation Summit in Santiago, Chile, on August 13-14. Click here to download the agenda. It will also host its second LatAm Oil & Gas Summit in Houston, Texas, on September 10-11. Click here to download the agenda.