The business of the Associated Distributors of Petróleos Mexicanos (Pemex) has taken an unexpected and risky turn.
Last week, Pemex informed the business groups participating in the distribution of petroleum products – which involves storage, transportation, and sale of diesel or gasoline – about its decision to “reduce” the bonus it grants them for brand visibility (BVDM), meaning, displaying the well-known logo of the eagle and the drop of oil in their activities. This decision has generated uncertainty and complications for these companies, but it would also mean a benefit for the state-owned company and Pemex gas station franchisees, according to various sources consulted by T21.
This “reduction” has been considered more like the cancellation of the bonus itself, as the document from Pemex Industrial Transformation (TRI) states that the BVDM will change from 0.08 pesos per liter transported to 0.00 pesos, starting from May 16th.
According to the Mexican Association of Energy Distributors (AMDE), Pemex did not previously inform participants in this activity, nor did it clarify the reason for the change. On the contrary, the notification of the update was communicated unilaterally.
In this context, AMDE itself presented a letter to Pemex on May 9th requesting a working meeting to understand the reasons for the decision and, if necessary, the reinstatement of the BVDM.
In the document made public by AMDE, it clarified that this incentive has been active for five years and described it as “fundamental for Associated Pemex Distributors to continue contributing to the country’s energy security, through their infrastructure and by serving various clients, including Pemex franchise service stations.”
In an interview with T21, Ernesto Hernández, legal representative of AMDE, emphasized that the decision regarding the BVDM generates uncertainty among fuel distribution companies, as some of them depend on the bonus for their businesses to be profitable.
Pemex’s document also mentions an increase in the brand visibility bonus granted to Pemex franchises (gas stations), which will increase from 0.09 pesos to 0.20 pesos per liter.
These distributors claim to be seriously affected, with some even considering the possibility of suing Pemex for breach of contract terms and conditions. However, AMDE’s legal representative detailed that the organization has determined to focus on establishing institutional dialogue.
However, he anticipates that in the worst-case scenario, if the “reduction” to zero continues, distributors may lose interest in this arrangement and cease using the state-owned company’s brand.
“The risk is that the business scheme with Pemex becomes unattractive and they operate as non-exclusive distributors, purchasing fuels from importers,” he stated.
AMDE is comprised of business groups with specialized transportation units and storage centers for the distribution and sale of Pemex petroleum products nationwide, through their own infrastructure investments. In fact, this figure survived the energy reform promoted by the federal administration of Enrique Peña Nieto and has been operating under the current more leftist government, despite changes implemented in energy matters.
Associated Pemex Distributors emerged as a strategic ally of Pemex for the distribution and delivery of fuels nationwide.
Changes favoring Pemex and franchises
Carlos Vallejo, Legal Director of the Association of Regulated Entities in the Energy Sector, told T21 that the “reduction” of the BVDM is a way to renegotiate the terms and conditions of fuel sales and distribution in Mexico.
“The strategy to eliminate the 0.08 pesos per liter sold could be a way to diminish the power of Associated Pemex Distributors. That is, what Pemex seeks is to position itself in the brand or in Pemex franchise service stations, thus promoting the direct purchase of fuels from MGC (Pemex’s fuel marketer) and not from the distributor,” Vallejo affirmed.
The consultant indicated that although this measure will not immediately result in a reorganization of fuel distribution, it could happen that at least a portion of end users, particularly transporters, are impacted by the diesel price increase, especially in self-consumption.
“If the associated distributor that supplies the product to them in their facilities (for self-supply) no longer has those 0.08 pesos from the BVDM, they will basically have to increase the price of the product. There is where we could see an impact; surely over time, there could be some manifestation from other organizations or fuel users that could perceive an adverse effect on the product price due to this initiative,” he said.
Carlos Vallejo determined that the change in the BVDM is a way of disempowering the figure of Associated Pemex Distributor, since as of May 16th, the only benefit would be product availability. “They had to be more sensitive and meet with the guild to explain the adjustments before issuing the changes,” he stated.
Although there is no official statement from Pemex at the moment, it is expected that AMDE representatives will meet with company executives before May 16th to define the future of Associated Pemex Distributors or to start removing the logo of the Mexican oil company.
With information from Enrique Duarte
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