What you need to know about Mexico’s energy reform

Mexico's energy reform will cause multiple changes in the country and its businesses in the next months and years. Our local expert explains the benefits this will bring to Mexico and to the companies investing or looking to invest in the country.

What is the energy reform? 

An effort to open the Mexico’s energy sector to private investment. Mexico’s constitution was amended to allow the private sectors to explore, develop and produce oil.

How will this benefit Mexico?

  • It will allow private investors to develop and  market  electricity and gas
  • The International Monetary Fund (IMF) estimates that the new legislation will cause a 13% reduction on electricity prices
  • It was also estimated that the manufacturing industry will grow up to 3.6%, impacting the national GDP by 0.6%
  • Local companies and external investors can partner, creating  opportunities for potential new businesses
  • It is a great opportunity for small and medium-sized companies (SME’s) establishment

What is happening: requirements, opportunities and decisions 

  • It has been decided that agreements types will be: shared production, shared utilities or licenses. These will be issued starting in August
  • Private investors will be required to have local experience, which makes partnerships a top recommendation 
  • 34 oil companies are already enlisted to participate, including Exxon Mobile
  • First stage will only include exploration in shallow waters , permits for deep waters exploration are going to be granted starting on June
  • It represents business opportunity for industries like: legal, accounting and human resources, among others
  • The ASEA Act (Federal legislation ruling the National Agency for industrial Safety and Environmental Protection of the Hydrocarbons Sector) will be responsible of regulating and supervising industrial and operational safety, and environmental protection in the hydrocarbons sector activities.

What to do if your business will be impacted 

The energy reform will cause multiple positive and/or negative changes in Mexico and Mexican businesses. It is recommended that everyone directly related or not, looks for orientation on topics like: fiscal amendments, and economic and social issues that may change or arise in the upcoming months and years.  For example, we all should be informed about any possible change or new regulations on: rules for the creation of new businesses, registration requirements, external relations processes, taxes reporting, human resources, etc. 

Fernando Garrido
Fernando  Garrido
Opinion

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