Mexico: Fuel market swings open for imports

Mexico’s federal government has announced that, effective from January 1st 2016, fuel will be able to be freely imported throughout Mexico’s territory, although any true effects are not expected to be seen for two years. Pemex, Mexico’s state oil company announced through its Commercial Directorate that the company has started negotiations with local businessmen in order to create new gas stations, which will now compete against Pemex’s own 11,439 pumping stations.

Starting this year, companies will now be allowed to import fuel, no longer being forced to purchasing their product through the state company, which until now held a monopoly on customer sales. This new freedom will allow competitors to set their own prices as they purchase fuel on the international market.

In an analysis on the effects of this opening, Mexico’s Center for Research for Development (CIDAC) points out that the new situation could cause excessive concentration, as those which are able to take advantage of foreign prices may compete against others, selling at similar prices for greater profit.

The report recommended that authorities, such as the Federal Economic Competition Commission (COFECE) and the country’s Energy regulator should closely monitor the development of the market through 2016, in order to determine whether companies have thrived or whether concentration does take hold.

Full content: El Diario / El Mañana

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