Mexican Court Extends Pemex Market Limit Ruling

(Argus, 7.Jun.2021) — A Mexican federal court reimposed market power limits on state-owned Pemex, including the mandate to publicly post wholesale prices, extending an initial temporary suspension of recent legislative reforms.

The state-owned company will now have to resume submitting its wholesale prices, commercial agreements and product discount plans for approval by the Energy Regulatory Commission (CRE), and publicly post much of this information — requirements that do not apply to other private-sector competitors.

But it is not clear whether Pemex will comply, as it did not immediately resume these practices under the temporary suspension issued by the court earlier. The CRE supports Pemex not having to follow these rules, as it had previously issued unsuccessful resolutions attempting to lift them.

Following congressional approval in early May, the energy ministry declared that Pemex no longer had to follow these rules as of 19 May. The CRE then cancelled 49 resolutions that limited Pemex’s contracts with its fuel buyers, such as setting maximum term lengths and not allowing the company to force customers to use its midstream services.

The initial temporary court suspension on 31 May gave CRE three days to inform the public that all decisions removing Pemex’s competitive limits had no effect.

Ruling party Morena had argued that there are enough participants in the motor fuel and hydrocarbons markets to allow Pemex to compete without the additional disclosure requirements. But market participants, consultants and opposition politicians said Pemex still supplies over 80pc of the gasoline market and 70pc of the diesel market — not enough to ease the measures aimed at consolidating a competitive landscape.

The Morena party has lost its simple majority in the lower house of the next congress that will start session on 1 September, based on preliminary results.

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By Sergio Meana