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INTERVIEW-Mexico to divvy up natgas pipelines, keep solar incentive
October 12, 2016 / 11:01 PM / a year ago

INTERVIEW-Mexico to divvy up natgas pipelines, keep solar incentive

MEXICO CITY, Oct 12 (Reuters) - Mexico’s state-owned energy companies will keep about 40 percent of natural gas pipeline capacity under an open season scheme, while reserving 615 million cubic feet for new private-sector projects, a senior official said on Wednesday.

Guillermo Garcia, head of Mexico’s Energy Regulatory Commission, or CRE, said in an interview the announcement of the capacity allocations is expected in the next week.

Separately, he noted that the CRE will keep at current levels an incentive known as net-metering that requires national electricity utility CFE to buy surplus power generated by rooftop solar panels.

Moving away from an energy industry dominated by former state-owned monopolies, Mexico is in the process of establishing new rules for more open oil, gas and power markets.

A top energy ministry official before taking over the CRE in April, Garcia said CFE and state oil company Pemex will keep 2.48 billion cubic feet (bcf) of 6.3 bcf in total pipeline capacity, or almost 40 percent.

Mexico’s existing private independent power producers will keep 1.56 bcf of capacity while 1.64 bcf will be allotted to other users with capacity rights, he added.

“What we want is to begin next year with a robust natural gas market where we liberalize the price in areas where there’s competition,” said Garcia.

To encourage solar investment, Garcia said the CRE would maintain the current net-metering cap of 500 kilowatts per project, allaying fears the threshold could fall due to budget pressures.

“We’re not going to lower it,” he said.

The CRE should begin publishing regional natural gas price averages in January so pricing hubs can develop, while the government’s long-standing role in determining fuel prices will gradually be relaxed, Garcia noted.

A landmark energy opening finalized in 2014 stipulates the government will stop setting gasoline and diesel prices by 2018.

“We will have a calendar in which we establish zones in which (fuel prices) will be opened before 2018 and with this calendar in mind, we will also establish the zones that will keep maximum prices” set by the government, said Garcia.

Areas far from refineries or ports where fuel imports arrive will likely keep government-set prices longer, he said.

Looking ahead, Garcia said he would like a bigger staff and budget, beyond a current staff of about 350 and an annual budget of roughly 600 million pesos ($31 million). He declined to elaborate. ($1 = 19.2900 Mexican pesos) (Editing by Dave Graham and Matthew Lewis)

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