Mexico to fine Pemex for monopolizing diesel, gasoline distribution


MEXICO CITY -- Mexico's antitrust authorities said Tuesday they have fined state-run oil monopoly Petroleos Mexicanos, or Pemex, 653 million pesos ($50 million) for maintaining a stranglehold on the distribution of gasoline and diesel to privately-owned gas stations, and that they have ordered Pemex to end the practice.

The ruling comes in the middle of a contentious debate in Mexico over opening up the oil sector to more private investment, both in oil and gas exploration and production, and in refining.

Pemex said it will contest the ruling, arguing that the Federal Competition Commission, or CFC, doesn't have jurisdiction over its constitutionally established monopoly.

Antitrust commissioners voted 3-2 that Pemex's legal monopoly over the production and sale of motor fuels doesn't extend to distribution of the fuel, and that it can't force gas station owners to use its distribution network. The regulatory body gave Pemex 30 business days to present a plan for compliance. It said that Pemex, through a series of agreements reached with the oil workers union, has gradually squeezed out competing third-party distributors.

Ending the distribution monopoly could save one billion pesos a year in transportation costs. As a result, those costs wouldn't be passed on to taxpayers in the form of fuel subsidies, the commission said.

Government-set fuel prices and subsidies are established by a complex formula that includes transportation costs.

Pemex said Monday that the CFC was on questionable legal ground.

"The CFC resolution was taken with two "no" votes out of the five commissioners on the grounds that the commission does not have jurisdiction to interpret regulations in the energy sector, and that the transportation and distribution of refined products are strategic activities that must be carried out by Petroleos Mexicanos," the company said in a prepared statement.

The commission's ruling, should it stand, "would cause serious damage to Petroleos Mexicanos and its workers," the company added.

David Shields, an energy analyst based in Mexico who publishes the magazine and website, said the distribution chain of gasoline and diesel from refinery to fuel-station appears to exist in a legal void in which the only authorized distributors are Pemex and companies holding Pemex contracts.

The gas station industry group Amegas, which represents about 11,000 Pemex franchises, has asked that the government address ongoing problems in Pemex's franchise system as part of its energy-overhaul proposal.

In a July presentation, the association complained of a large black market in motor fuels, and of Pemex fuel tankers that deliver less fuel than they bill for.

Dow Jones Newswires

Related News

From the Archive