Mexican government presents new legislative framework for CFE and PEMEX

The Mexican Government has sent for approval a set of secondary laws of the constitutional reform on energy to the Congress. Six new laws were presented (the Pemex Law, CFE Law, Energy Planning and Transition Law, Electricity Sector Law, Hydrocarbons Law and the National Energy Commission Law), while other five laws were harmonized (the Hydrocarbons Revenue Law, Mexican Petroleum Fund for Stabilization and Development Law, Biofuels Law, Geothermal Law and the Organic Law of the Federal Public Administration). The new regulation calls for the vertical and horizontal reintegration of the CFE and PEMEX by the absorption of all their subsidiaries. The participation of both government companies will no longer be considered as monopolistic under the Article 28 of the Constitution since they “fulfil a social function of providing strategic public services”. 

Part of the reforms have already been considered within the strategic plans of the affected companies, like the CFE, which expects an investment of US$23.4bn for the installation of 13 GW of new capacity and for improvements on its transmission and distribution services.  The participation of the private initiative in the electricity market is defined through six schemes: three for own consumption and three for power generation; in addition, mixed investment will also be allowed if the CFE maintains a participation of at least 54%. Pemex is given preference for the determination of exploration and extraction areas, as well as the possibility of deciding whether to partner with private parties in mixed contracts; the Oil Law for Welfare is incorporated as a new tax regime, while the regulation aims to rescue the national petrochemical industry and to improve the production of free fertilizers and the traceability of hydrocarbons. 

Finally, with the Law of the National Energy Commission, a decentralized body of the Energy Secretary is created, which will have technical and operational independence to regulate the granting of permits for the generation and commercialization of electricity; the establishment of tariffs for all associated services; the surveillance of the wholesale electricity market, while in terms of hydrocarbons, it will be in charge of all the permits of the production chain of natural gas, petroleum products, petrochemicals; as well as the establishment of rates and price monitoring.

In October 2024, the Mexican Senate approved a constitutional reform to strengthen state-owned Pemex and CFE, expecting to reverse the constitutional amendments made in 1992 and 2013, that opened the energy sector to private capital, through a series of reforms.