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Mexico

Oil Liberalization to Commence

The transition from the monopolistic structure of Pemex to one of competition will happen gradually under the guidance of a timetable created by the CRE

Rafael Ochoa, Guillermo García Alcocer, Aldo Flores Quiroga and Carlos Murrieta Cummings gave comments and the transition to a liberal gasoline market, photo: Cuartoscuro/Adolfo Vladimir
By Vianey Pichardo Whatsapp Twitter Facebook Share
12 months ago

The Energy Regulatory Commission (CRE) reported that the liberalization of the price of gasoline will start in March 2017 and will end in December, when the entire country will operate in a free market.

This means that the price of fuel will no longer be determined by the Secretariat of Treasury and Public Finance (SHCP), and will now be determined by a formula which includes the international price of oil, refining costs, logistics, the exchange rate, and the amount of handling of the Operators, explained CRE president Guillermo García Alcocer.

The transition from the monopolistic structure of Petróleos Mexicanos (Pemex) to one of competition will happen gradually under the guidance of a timetable created by the CRE.

It will be done in five stages; the first two will take place in the north, the third and fourth will take place in the center and west respectively. The last will take place in the Yucatan peninsula.

On March 30, 2017, stage 1.1 will begin in Baja California and Sonora. Stage 1.2 will commence on June 15 in Chihuahua, Coahuila, and Nuevo León, Tamaulipas and the municipality of Gómez Palacio in Durango. The third, or phase 2.1, is scheduled for Oct. 30 in Baja California Sur, Durango and Sinaloa.

In stage 2.2, 20 additionally states will be incorporated. The last stage, 2.3, will commence on Dec. 30 in Campeche, Quintana Roo and Yucatán.

Except for the northern border strip, other states will operate with a “maximum price” set by SHCP until their prospective phases commence. The Pemex Open Season process will precede the phase of flexibilization. Private companies will be able to rent the idle capacity of the oil company, in order to bring their own fuel to dispatch terminals.

“This will accelerate the competition process; the industry will not have to wait to develop investments or build terminals or pipelines,” explained Pemex Industrial Transformation director Carlos Murrieta Cummings.

Details of the plan have been laid over this map. Photo: The News

Details of the plan have been laid over this map. Photo: The News

García Alcocer described the opening timeline as the key missing piece to begin investments in the country’s gasoline market, which he said range between 11 and 12 billion dollars. This figure includes the opening of new gas stations, transportation pipelines and the development of railways.

García Alcocer, described the opening calendar as the missing piece to begin investments in the country’s gasoline market, which he said ranged between $11 -12 billion, a figure that includes the opening of new gas stations, transportation pipelines and the development of railways.

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