The potential dissolution of the Energy Regulatory Commission (CRE) and the National Hydrocarbons Commission (CNH) as Autonomous Constitutional Bodies (OCA), with a proposal to transfer their functions to the Ministry of Energy (Sener), has created a climate of uncertainty in the energy sector. This situation is particularly concerning given the imminent review of the CRE’s NOM-016 and the upcoming enforcement of NOM-044.
NOM-044-SEMARNAT-2017, which will take effect on January 1, 2025, mandates that only cargo vehicles meeting Euro VI / EPA 10 standards can be sold. These standards require the use of ultra-low sulfur diesel (DUBA). However, Mexico’s national production capacity for petroleum products is limited, leading to a reliance on fuel imports, primarily from the United States. In the context of nearshoring, this situation is further complicated by the lack of DUBA availability across the country, as noted by Carlos Vallejo, founding partner of QUA Energy Consulting, in an interview.
This combination of factors presents a significant challenge for the industry, which must comply with stringent regulations in an environment of regulatory uncertainty and limitations in fuel supply.
Vallejo explained that, although there is an appetite for acquiring new units that comply with the regulation, the fact that engine specifications are more demanding in terms of fuel supply presents a challenge due to the uncertainty surrounding the distribution of ultra-low sulfur diesel (DUBA). He also highlighted the need for the authorities, specifically the Ministry of Energy (Sener), to properly monitor and address the relevant reviews of the CRE’s NOM-016 (Quality Specifications for Petroleum Products).
“We see that PEMEX is unable to supply service stations with DUBA. Over the past five years, we have witnessed a series of extensions that reflect the lack of necessary infrastructure in the six refineries, and the modernization processes remain incomplete. This prevents the state-owned company from producing fuel that meets the required sulfur specifications in parts per million. It is unlikely that they will complete the necessary adjustments in the coming months to effectively supply the fuel,” Vallejo detailed.
Given the possible reconfiguration of authorities and the dissolution of the CRE, the specialist mentioned that there could be another extension of NOM-016 until all related legal and regulatory bodies have been modified. Although these processes would take time, one option is for the Ministry of Environment and Natural Resources (Semarnat) to step in and prioritize the issue, ensuring that the necessary reviews are conducted.
On the other hand, Vallejo pointed out that even if the CRE is not dissolved, the problem of clean diesel distribution will persist because PEMEX is not prepared. In this context, a joint importation effort between the state-owned company and fuel importers could meet the demand. “That’s why it’s important to open up new permits to ensure that the necessary volumes can be supplied,” he stated.
Finally, Vallejo emphasized that given the potential variation in operational costs for transport and logistics companies, and considering that fuel expenses are among the highest, it is crucial to create a climate of certainty because the costs associated with transporting goods ultimately affect everyone.
In this regard, “It is urgent for the authorities to take effective action to make the necessary adjustments, including reviewing NOM-016 and opening new service stations that supply DUBA,” concluded the founding partner of QUA Energy Consulting.
