The Energy Regulation and Markets Review - Stikeman Elliott

Mexico
Furthermore, private parties are also able to import and export electricity when
importation is done only for self-consumption while exportation may be made under
any of the previous production schemes.
A permit granted by the CRE is required to operate electricity production facilities
under any of these production schemes, as well as for the importation or exportation of
electricity as set out in the Electric Energy Law. During the permit granting analysis
process, the CFE may opine on the granting or denial of the permit.
In all cases, irrespective of the type of activity to be developed, the process to
obtain a permit from the CRE consists mainly of the submittance of an application
containing legal, technical and financial information of the company and the project,
demonstrating its experience and proficiency to carry out the activity. Although the legal
provisions establish a period of between three and four months for the analysis of the
application and issuance of the permit (or denial of it, as the case may be), in practice it
usually takes around six months from the application filing date.
Regarding the permit granted by SAGARPA for the production of bioenergetics
using corn as raw material, after submission of the application SAGARPA has 15 business
days to issue the permit. Thereafter, an application must be submitted to the Ministry
of Energy for the production of bioenergetics, attaching a copy of all the environmental
licences required for the project and the permit granted by SAGARPA. The Ministry of
Energy then has 30 business days to deny the issuance of the permit, otherwise it will be
deemed granted. Such permit will be in force for 30 years from its issuance date.
iii Ownership and market access restrictions
In the past, the Mexican regulatory system excluded foreign investors from participating
in sensitive areas such as electricity production and hydrocarbon extraction and
exploitation. Throughout the past two decades, the Mexican government’s position
has gradually changed, allowing the participation of foreign investors in such areas.
Currently, foreign investors can fully participate in the same activities as Mexican citizens
or companies, except for three specific cases: (1) gasoline retailing and LP distribution;
(2) construction of pipelines for the transportation of oil and its derivative products; and
(3) oil and gas drilling.
In the first case, only Mexican individuals or companies with a foreigners exclusion
clause in their by-laws can carry out gasoline retailing and LP gas distribution activities.
In the second and third cases, the Foreign Investment Law states that for the
construction of pipelines for transportation of oil and its derivatives, and for oil and gas
drilling, an authorisation from the Ministry of Economy must be obtained when foreign
investors hold more than 49 per cent of the corporate capital of the company developing
such activities.
In the event of the acquisition of assets for the production of electricity, the
distribution of LP gas or natural gas, or generally any activity related to the energy
market, it is likely that the related transaction surpasses the thresholds established by
the Federal Law on Economic Competition and so will need the approval of the Federal
Competition Commission (‘COFECO’) to be able to accomplish such transaction that
may be deemed a concentration.
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