Mexico Takes Controversial Step to Limit Private Fuel Imports

RIO DE JANEIRO, BRAZIL – Mexico’s government has issued new regulations to limit the ability of private firms to import fuel, according to a federal decree, fanning concerns that the move may unduly benefit state-owned oil company Petroleos Mexicanos (PEMEX).

The rules, issued by the energy ministry and scheduled to go into force on Monday, Decemer 28th, are part of a drive by President Andres Manuel Lopez Obrador to put an end to fuel imports and make Mexico oil-independent.

Among the changes set out in the government’s official gazette on Saturday, the energy ministry will now offer import permits for five years rather than 20 years.

Writing on Twitter, oil analyst Gonzalo Monroy said the measure appeared designed to close the market and ultimately leave it in PEMEX’s hands.

Mexico’s antitrust regulator Cofece had fiercely criticized a draft proposal for the new regulation and urged the economy ministry to carry out further analysis.

Cofece said in a resolution last week that curtailing permits would lessen incentives to invest, while “reaffirming … the dominant position of PEMEX.” Consumers could suffer fewer supply options as a result, it argued.

“The draft plan would seriously hamper … free competition in the commercialization of petroleum products,” Cofece said.

Lopez Obrador has made reviving PEMEX a top priority, in part by clawing back more control of energy policy and by breaking with the prior government’s aim to treat Pemex on equal terms with new private and foreign entrants into the Mexican market.

The leftist leader has instead sought to bring regulators in line with his broader plan to boost ailing Pemex, which has suffered years of losses, and in April lost its investment-grade credit rating.

Source: Reuters