Schedule Comment

According to Transitory Article 12 of the 2017 Federation Revenue Act, public gasoline and diesel prices for 2017 and 2018 will be set in accordance with a flexible schedule or agreement issued by the Regulatory Commission of Energy with input from the Federal Competition Economic Commission.

Schedule

The schedule will be established by region. If gasoline and diesel commercialisation in a specific region is still not market based, the maximum price will be set by the Ministry of Finance and Public Credit. The ministry will consider the price of the international fuel reference and, if applicable, factors such as:

  • differences in fuel quality;
  • logistics costs, including transport costs between regions;
  • distribution and selling costs in service centres; and
  • the various models of distribution and exchange with the public for the timely supply of gasoline and diesel.

The maximum prices will be fixed until the date indicated in the schedule. Additionally, in regions with a fixed maximum price, the asymmetric regulation for access to infrastructure should be applied when ordered by the Federal Competition Economic Commission.

If non-market increases are detected in specific markets, maximum prices may be applied in regions or sub-regions.

The agreement that establishes the gasoline and diesel price schedule was subsequently published in the Official Federal Gazette. The agreement contains the schedule, which was established following studies of service stations, their locations and the proximity between them, as well as sources of supply, means of transport and storage for each region. The Regulatory Commission of Energy considered it feasible to make prices flexible in response to the opening of Pemex Logística's storage and pipeline transportation infrastructure.

The commission's aim is to deregulate gas and diesel prices in a gradual and organised manner, in order to ensure that they reflect actual delivery costs. The objective of the schedule is to promote the development of infrastructure and reduce costs through the entry of new economic agents in the Mexican market. Finally, price liberalisation will also apply to first-hand sales.

In areas where this could lead to monopolistic practices, the Regulatory Commission of Energy and the Federal Competition Economic Commission will exercise special vigilance.

The schedule will take effect in each zone on the following dates:

  • Baja California and Sonora – March 30 2017.
  • Chihuahua, Coahuila, Nuevo Leon, Tamaulipas and the municipality of Gómez Palacio in Durango – June 15 2017.
  • Baja California Sur, Durango and Sinaloa – October 30 2017.
  • Aguascalientes, Mexico City, Colima, Chiapas, Mexico State, Guanajuato, Guerrero, Hidalgo, Jalisco, Michoacán, Morelos, Nayarit, Puebla, Querétaro, San Luis Potosí, Oaxaca, Tabasco, Tlaxcala, Veracruz and Zacatecas – November 30 2017.
  • Campeche, Quintana Roo and Yucatan – December 30 2017.

Comment

There are abundant opportunities for foreign investors to participate in the development of Mexico's energy infrastructure, especially given that the market is newly liberalised and given Pemex's inefficiencies. There is thus great potential for the growth of the Mexican energy industry.

For further information on this topic please contact Luis Roberto Ruiz Munguía at Ibáñez Parkman y Asociados SC by telephone (+52 55 5250 5912) or email (roberto.ruiz@iparkman.com.mx). The Ibáñez Parkman y Asociados SC website can be accessed at www.i-parkman.com.

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