As was widely expected, the political coalition of the ruling Morena party and its allies in Congress has voted in favor of a bill proposed early this year by the former president that eliminates seven of the 11 independent regulators in Mexico, including two in charge of the energy sector, CRE and CNH, which will be "absorbed" by the energy ministry.
The National Hydrocarbons Commission, or CNH, is responsible for overseeing all the exploration and production activities in the oil and gas industry, while the Energy Regulatory Commission, or CRE, oversees activities in the refined products, natural gas and power markets.
The vote, which happened late on Nov. 20 after a heated debate of over seven hours, was only over the broad aspects of the bill, and the discussion over the fine details will continue on Nov. 21. Once this is voted, the bill will be sent to the Senate for its discussion and approval. But, given Morena and its allies also have a majority in the Senate, the bill is expected to pass swiftly and be sent to the executive branch for its publication in the coming days. When it is published, it will become law and as of that date, lawmakers will have 90 days to draft the secondary laws that will guide their operation.
Since its first presentation, the bill has been defended by its supporters, who argue that it will generate savings for the state and simplify procedures.
The bill does not eliminate rights or services to the people, but seeks to improve efficiency in public spending and minimize duplicity of functions, said congressman Gerardo Villarreal Solis, from the country's "green" Party. The premise is to "do more with less," he said.
Critics, on the other hand, warn it could hurt competition and reduce the already limited transparency.
During a recent panel discussion about the reform organized by local media outlet Oil&Gas Magazine, and moderated by S&P Global Commodity Insights, experts said there are still many questions that can only be answered when the secondary laws are published, but noted there is the risk that the operations in the sector become less transparent when the regulators disappear.
"When a government concentrates a lot of power, there are less incentives to be transparent," said Miriam Grunstein, a nonresident scholar at the Center for the US and Mexico at the Baker Institute.
The other big risk is that the reform hurts competition, experts said, although they noted that in recent months, the independence of the regulators had been brought into question as the federal government had found a way to hand-pick the members of the regulators' government body.
The bill comes amid a wave of regulatory changes that include a complete overhaul of the judiciary and changes to the legal nature of the state energy companies Pemex and CFE.
