MEXICO CITY — Mexico’s Energy Regulatory Commission (CRE) is gearing toward the release of guidelines for the emission of financial-rights tickets for the fulfillment of the country’s Public Policy on Minimum Fuel Inventories (PPMFI).
OPIS had access to the ticket emission guidelines expected to be released by CRE in the coming days, according to a source close to the situation. Tickets will be emitted only by fuel marketers with excess inventories at a price set freely by the market. Storage facility operators won’t be able to sell tickets. “The conditions of costs, contracting and in general, conditions of commercial strategy, will be subject to free negotiation between the parties,” CRE states in the guideline draft. Companies unable to fulfill the policy could get their marketing permits revoked as the maximum penalty after multiple warnings, according to commentaries shared by Mexico City-based consultancy energy firm Lexoil of the CRE-drafted guidelines. However, any terms set by counterparties must follow the norms established in free economic competition and guidelines for the emission and purchase of tickets, CRE adds.
The PPFMI enforcement starts July 1, requiring fuel marketers to hold strategic reserves of five days of gasoline and diesel sales between November 2019 and May 2020 and three days of jet fuel inventories split between airports and storage facilities. To provide operative flexibility and guarantee the market liquidity to fulfill the PPMFI, the policy allows the emission and purchase of tickets to acquire the financial rights over inventories held by third parties, the draft states. Under the financial rights obligations, the inventory holder is obligated to sell the stock to the ticket owner in case of fuel supply disruptions or product shortages, the guidelines indicate. Ticket buyers and sellers must register their transactions via an online portal set by CRE within 30 days of the purchase, including the buyer, seller, price, inventory region and product breakdown. CRE’s online platform will automatically verify the balance of each marketer and distributor to ensure it doesn’t exceed its existing inventories, the guideline draft shows. Companies with offtake contracts on facilities still under development will be required to hold tickets until their facilities startup, CRE indicated.
Operative volumes from transload activities will not count as strategic inventories, CRE said. Therefore, the use of car trains or vessels as storage of strategic lists isn’t allowed. If scheduled maintenance decreases the capacity for a facility to store fuel, marketers are obligated to acquire tickets for another facility until the work concludes. Also, ticket sellers must ensure the product stored to fulfill the specification norms set by CRE. Based on the guidelines, ticket buyers should try to hold half of their inventories on the last-mile terminal they typically use to supply their end-users. If this isn’t possible, companies can use storage facilities or hold tickers for stocks in any part of Mexico. Regarding sanctions, CRE will give a five-day notice for companies to respond regarding any suspected or confirmed irregularities. If the company with its first response doesn’t solve the matter, it will have three days to correct any problems. If not, CRE will impose a sanction. Inventories held by companies can be released only after the declaration of an expected emergency by Mexico’s Government Coordinating Council for the Energy Sector.
Market participants have to notify the release of inventories to CRE as well as the time frame to replenish stocks. In the case of an emergency, market participants can use inventories set apart under the PPMFI. However, companies must justify the crisis to CRE within two working days after the event. The commission can evaluate the ticket market at any time and introduce new regulations to ensure a reliable, stable, and secure supply.