Reed Smith News Flashes

As reported in our previous alert, in late March, the Mexican president sent a bill to the lower house of Congress, the Chamber of Deputies (Camara de Diputados), to amend the Hydrocarbons Law, with the intention of restricting private sector involvement in downstream fuel-related activities that may compete with the state owned companies CFE and Pemex.

作者: Nicolas Borda

Despite Mexico’s antitrust authority (COFECE) urging Congress to reject the proposed amendments to the Hydrocarbons Law, the lower house approved the amendments on April 14, 2021.

COFECE stated that “if approved, the bill would create legal uncertainty for participants in the oil & gas sector and promote an artificial and unjustified restriction of the supply of products and services that would be detrimental to Mexican consumers.”  Jana Palacios, chair of COFECE, said on Twitter that the reform should not be approved because it would damage competition in the Mexican energy sector.

The lower house fast-tracked approval of the revised Hydrocarbons Law, with 292 legislators voting in favor of the bill and 153 voted against.

The bill will now move to the Senate, where it is expected be approved swiftly next week. As with the electricity bill, the law will then face domestic and international legal challenges over competition principles, potentially delaying implementation.  We expect a large number of constitutional appeals (amparos) to be filed.

The president has indicated his willingness to merge all regulatory agencies into the existing ministries for budgetary reasons.  Moreover, he said the proposed amendments are necessary to fight corruption and fuel theft.  On the flip side, the move is widely seen as helping Pemex and CFE to gain market share.

News Flash 2021-106