Mexico energy regulatory watch: LPG fines, Cofece appointments

Mexico’s competition watchdog Cofece has fined 53 companies a total of 2.4bn pesos (US$125mn) for fixing prices and divvying up different geographical markets.

Fallout from the unprecedented decision has reached the political sector, with energy minister Rocío Nahle telling the 2022 LPG Congress, organized by industry trade group Amexgas, that Cofece crossed red lines.

"The agency that regulates energy is [regulatory commission] CRE," Nahle said. "Cofece constantly goes beyond its limits, but that's their business ... There is competition, I am speaking before [different] company owners. What we need is order and a [price] cap for the well-being of Mexicans."

Nahle added Cofece's decision would increase industry costs, leading to higher consumer prices, which would hurt the public as well as the companies involved. Spurred by an energy ministry requirement, CRE imposed a country-wide price cap on LPG sales in August 2021, before Cofece issued a definitive assessment of the industry's lack of competition.

Cofece's latest ruling also involved a prohibition for certain workers to conduct activities in the industry.

About 2,000 LPG sale permit applications are estimated to be pending with CRE, according to fuel distributors association ADG.

The queue includes storage terminal permits, processing plants and other related infrastructure, ADG president Luis Landeros told the press during the event.

However, approvals are picking up, Landeros said, similar to the situation facing fuel sellers.

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President Andrés Manuel López Obrador will create a list of candidates to fill vacancies at Cofece after a ruling by the supreme court.

“We are going to comply with the court's ruling,” he said. "I do not agree with Cofece's existence because it is an agency that defends private companies, not public companies, it does not defend the people. It is an instrument that was created to protect the model of privatizations."

The government has repeatedly criticized regulatory bodies. Last year, it tried to eliminate energy regulator CRE and hydrocarbons regulator CNH as part of a constitutional reform that failed to pass the lower house.