On July 8, 2020, the Ministry of Energy ("SENER") issued through the Federal Official Gazette, the Energy Sector Program (Programa Sectorial de Energía) 2020-2024 (the "PROSENER")1. PROSENER is a planning instrument derived from the National Development Plan and contains the priority objectives, strategies and actions to be taken for the development of the energy sector in accordance with the vision of the current administration.
The PROSENER begins with an analysis of the current situation of the energy sector in Mexico, based on the results of the energy reform held in 2013, in both the electricity and hydrocarbon sectors. Based on said analysis, the document sets forth the following six priority objectives for the current administration in these matters:
- Achieve and maintain sustainable energy and self-sufficiency to satisfy the energy demand of the population with national production;
- Strengthen the State Enterprises ("EPE") – Petróleos Mexicanos ("PEMEX") and the Federal Electricity Commission ("CFE") – as guarantors of energy security and sovereignty, which shall impulse national development and detonate a multiplier effect in the private sector;
- Organize the scientific, technological and industrial capabilities that are necessary for Mexico's energy transition throughout the 21st century;
- Raise the level of efficiency and sustainability in the production and use of energy in the national territory;
- Ensure universal access to energy, in order that all of Mexican society have access to such energy for its development; and
- Strengthen the national energy sector in order to constitute the base that promotes the development of the country as capable of satisfying its basic needs with its own resources, through EPE, social and private companies.
Also, the PROSENER proposes a series of strategies and actions aimed to achieve the aforementioned priority objectives. Among these strategies and actions, the following are noteworthy:
- Align the performance of the EPE, public and decentralized agencies, as well as the Energy Regulatory Commission ("CRE");
- Review and correct the authorization of generation permits, which are contrary to the objectives of national energy policy;
- Set the policy for the development of new power plants, including guidelines in order that CFE participates in the market on equal conditions;
- Evaluate and update on an annual basis the acquisition requirements, obligations and guidelines for issuing clean energy certificates;
- Coordinate the determination of regulated tariffs and ensure that tariffs for end users do not rise above inflation;
- Analyze, evaluate and adopt the regulations of the power market to the national energy policy;
- Include guidelines for the incorporation of intermittent renewable energy within the energy regulation;
- Align the criteria issued by CRE for granting renewable generations permits with the National Development Plan;
- Evaluate the performance of the agreements executed under Long-Term Auctions, based on national energy policy objectives;
- Strengthen CFE to guarantee the stewardship of the State, and the security and sovereignty in the generation, transmission, distribution, commercialization and supply of electricity;
- Modify unjustified regulations that cause financial damages to CFE;
- Analyze and, if applicable, modify the rules of the Wholesale Electricity Market, allowing the efficient operating costs of CFE and the National Electric System to be recognized;
- Evaluate and adjust the wheeling charges to cover the real costs of the service;
- Review and, if necessary, modify the terms for the strict legal separation of the CFE;
- Promote technological and regulatory changes to move towards electricity generation with renewable sources, both connected and not connected to the grid;
- In an orderly manner, increase the use of energy generated from renewable sources; and
- Take advantage of fuel oil for electrical generation.
- Align the performance of the EPE, public and decentralized agencies, as well as the National Hydrocarbons Commission;
- Increase investment in exploration and extraction activities in land areas and shallow waters through PEMEX;
- Increase investment in exploration and extraction activities to obtain light crude oil and wet gas, as well as for primary, secondary and improved recovery;
- Secure the investment for the construction of the new refinery located in Dos Bocas, Tabasco and the reconfiguration of three refineries in the National Refining System;
- Rehabilitate and modernize complex gas processes to increase operational reliability;
- Develop new natural gas transportation infrastructure to cover regions without access to natural gas;
- Promote private and social sector investment in the petrochemical industry;
- Analyze the public policies of the natural gas and storage market and, if necessary, modify them;
- Strengthen PEMEX to guarantee state leadership, security and sovereignty in hydrocarbon production and supply;
- Modify the unjustified regulations that cause financial damages to PEMEX;
- Promote the development of infrastructure projects for the transportation, storage and distribution of petroleum products, natural gas and petrochemicals;
- Evaluate the participation of PEMEX in the distribution of LP gas under its own brand; and
- Evaluate the performance of the Hydrocarbon Exploration and Extraction Allocations and Contracts.
In summary, the objectives, strategies and actions of the PROSENER are focused on the following:
(i) Strengthen the participation of CFE and PEMEX, in the electricity market and in the hydrocarbon sector, respectively;
(ii) Review and, if necessary, modify the current regulations to align them with the vision of the new energy sector administration, including reviewing the performance of permits and contracts executed with individuals in previous administrations;
(iii) Have greater control over the generation and dispatch of electricity, particularly from renewable sources; and
(iv) Connect PEMEX and CFE with other organizations such as the National Energy Control Center, the National Center for Natural Gas Control, and even the energy sector regulators.
The objectives, strategies and actions contained in the PROSENER are consistent with the policy outlined by this administration, as well as with the other planning instruments issued, including the National Development Plan 2019-2014, the Development Program of the National Electric System 2019-2033 and with the Reliability, Safety, Continuity and Quality Policy in the National Electric System, recently published by SENER.
1 Available here: https://www.dof.gob.mx/nota_detalle.php?codigo=5596374&fecha=08/07/2020
Gustavo Neyra Lopez (Legal Intern, White & Case, Mexcio City) contributed to the development of this publication.
This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2020 White & Case LLP