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Driving Performance of Mexico's Energy Regulators

image of Driving Performance of Mexico's Energy Regulators

As “market referees”, regulators contribute to the delivery of essential public utilities. The internal and external governance of regulatory agencies are essential to determining how regulators and the sectors they oversee perform. The OECD has developed an innovative framework that looks at the institutions, processes and practices that can enhance regulators’ performance. In this report, the framework is applied to the external governance of Mexico’s energy sector and its three regulatory bodies, the Agency for Safety, Energy and Environment (ASEA), the National Hydrocarbons Commissions (CNH) and the Energy Regulatory Commission (CRE), following a structural reform of the sector and its regulatory institutions. The review offers insights into the progress and challenges in the implementation of the reform, highlighting the importance of structured co-ordination and accountability mechanisms based on a common strategic agenda, alignment of processes for good regulatory outcomes as well as sufficient operational flexibility. The report is complemented by forthcoming reviews of the internal governance arrangements of the three regulatory agencies, constituting a comprehensive body of work on the regulatory governance of Mexico’s energy sector.

 

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Assessment and recommendations

The current government led by President Enrique Peña Nieto has undertaken a significant modernisation of the Mexican regulatory framework, including in the energy sector. Launched in 2013, the reform restructured the oil and gas industry and opened access to the country’s hydrocarbon resources to national and foreign, public and private entities, thus ending the monopoly of the state-owned oil company Petróleos Mexicanos (PEMEX), in order not only to increase investment and government revenue for the benefit of all Mexicans but also to lead on environmental issues by embedding clean energy targets in legislation. Equally important, the national energy system was further opened up to private competition in order to reduce electricity costs, facilitate the transition to renewable sources of energy and extend electricity coverage.

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