Mexico's Senate OKs Bills Expanding Power of Energy Regulators

Posted by Joseph R. Fonseca
Monday, July 21, 2014

Mexico's Senate gave general approval on Monday to legislation laying out expanded powers for energy regulators, part of the fine print needed to implement a constitutional reform that overhauls the oil, gas and electricity sectors.

Senators must still debate reservations to the regulatory legislation, which is likely to last into the night.

The legislation forms part of the so-called secondary laws needed to flesh out the opening of the energy market, which is the centerpiece of the government's reform agenda.

Once the reservations have been voted on in the Senate, the focus will move to the lower house of Congress, which is already debating the secondary laws passed by the upper chamber.

Monday's legislation provides the national hydrocarbons commission and the energy regulatory commission with budgetary and management autonomy as well as new powers to supervise and sanction newly opened energy markets.

Meanwhile, two other bills passed late on Sunday define the administration and new transparency measures for state-run oil company Pemex and national electricity utility CFE.

That legislation gives Pemex more budgetary autonomy and a new tax structure, while gradually requiring both Pemex and CFE to operate as competitive firms.

Both sets of bills were passed by a coalition of the ruling Institutional Revolutionary Party (PRI) and the center-right National Action Party (PAN), and opposed by a collection of center-left parties.

Separately on Monday, lower house committees passed the hydrocarbons law that spells out the terms of the potentially lucrative oil and gas production licenses and contracts in President Enrique Pena Nieto's reform.

The hydrocarbons law, which forms the heart of the energy reform, has already passed the Senate.

The legislation moving through the Senate must be complemented by bills detailing the new fiscal regime and a planned wealth fund. They have yet to advance in Congress.

The reform package ends the exploration and production monopoly held for decades by Pemex, as well as the monopoly held by CFE.

Final congressional approval of the secondary laws is expected by the end of July or early August.

(Reporting by David Alire Garcia; Editing by Simon Gardner, Meredith Mazzilli and Ken Wills)

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