Preliminary draft of new provisions on the retailing (expendio) of petroleum products

On August 1, 2022, the Energy Regulatory Commission ("CRE") published a preliminary draft of new "General administrative provisions that establish the requirements for the submission of applications for permits, modifications, updates and obligations for the activity of retailing petroleum products." (the "Preliminary Draft").¹

General Description of the Preliminary Draft

The purpose of the Preliminary Draft is to regulate the petroleum products' retailing activity at service stations, both in the form of public retailing and self-consumption. Particularly, the Preliminary Draft aims to regulate matters related to: (i) the requirements for the obtainment of the corresponding permits; (ii) compliance with obligations by the permit holders; (iii) the instances and requirements for modifying and updating the permits granted; and (iv) the supervision of the obligations of the permit holders.

We note that the petroleum products covered by the Preliminary Draft are limited to "Gasoline" and "Automotive Diesel"; therefore, the rest of the petroleum products regulated by the CRE would be exempted.

Relevant aspects of the requirements to apply for new permits

The Preliminary Draft foresees that those interested in obtaining permits for retailing petroleum products must comply with legal, technical and financial requirements, among which the following stand out (not exhaustive):

Legal requirements

• Prove its legal existence and the personality of its legal representative.
• Submit certain information about its shareholding or capital stock structure up to the level of individuals.
• Indicate other permits obtained by each direct or indirect partner or shareholder.
• Submit the acknowledgment of receipt of the social impact evaluation.

Technical requirements

• Submit the location of the facilities with georeferenced data, attaching a map identifying the georeferenced coordinates of the polygon where the service station project will be located.
• Technically describe the project, detailing the number, type and both operating and design capacity of the tanks, characteristics of the dispensaries, capacity per hose, number of hoses per dispensary, design-operating flow per dispenser and maximum design capacity of the station, and indicate if it has other services such as convenience stores, restrooms, showers, and/or restaurants, among others.
• Indicate the products to be retailed, the sub-products and their brand, as well as the technical data sheet of the composition and physicochemical characteristics of the product.
• Indicate the brand and visible signs that distinguish the service station, such as its name, number, design and color. Likewise, attach the graphic or corporate identity manual of the brand requested to be included in the CRE's catalog of products and brands.
• Attach the registration receipt of the brand before the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial). In the event that the petitioner is not the owner of the brand, submit the original of the use or license contract of the brand or franchise in force.
• Attach the extended basic engineering drawings and a technical opinion of the design of the service station, as well as the technical data sheets of the dispensaries to be installed containing the specifications of the instrument or measuring system for dispensing gasoline and fuels.

Financial requirements

• Submit the approximate investment of the project, attaching supporting documentation.
• Submit a business plan of the project, including investments, operation and maintenance costs.
• Submit evidence of the ownership or possession of the assets, including the land where the service station is located, and submit a certificate of alignment and official number.
• Submit a market study for the development of the project.

We note that the Preliminary Draft foresees that the CRE, within the analysis to grant the corresponding permit, will verify that the permit holder is up to date in the compliance of its obligations in other current permits previously granted by said commission.

Relevant aspects of compliance with obligations by permit holders

The Preliminary Draft envisages the existence of certain obligations to be fulfilled prior to and after the start of operations of the permit holder. These obligations include (but are not limited to):

Obligations prior to the beginning of operations

• Notify the estimated date of beginning of operations.
• The permit holder must start operations within a period not exceeding 12 months, as from the notification of the granting of the permit.
• Inform the amount of investment effectively disbursed, the issuance of the social impact resolution, etc.

Obligations after the beginning of operations

• Submit statistical reports on a daily basis.
• Submit monthly reports on: (i) its supplier, where the latter indicates that it has the feasibility and logistics necessary to meet the demand of the permit holder; (ii) change in retail prices of gasoline and automotive diesel each time sales prices are modified, within a maximum period of sixty minutes prior to the application of the prices; (iii) monthly average of the estimated commercial margin for each petroleum product, among others.
• Maintain a user complaint system and report complaints annually to the CRE.
• Submit annual information on its shareholding structure and capital stock and the annual evaluation report in accordance with Norma Oficial Mexicana NOM-016-CRE-2016 for each petroleum product retailed.
• Provide certain "organizational control" manuals (codes of ethics, control mechanisms for operational, accounting and third party information, organization and procedures manual, control, monitoring and auditing procedures, among others.).

Relevant aspects of permit updates and modifications

The Preliminary Draft establishes the scenarios that will give rise to permit updates and modifications, the deadlines and procedure for their attention and the requirements for their processing.

Permit modification scenarios

• Among the scenarios for modifying permits are assignment, succession, changes in the permit holder's shareholding structure involving change of control, technical modifications and change of brand.

Permit updating scenarios

• Among the scenarios for updating permits are the change of name, denomination or corporate name of the permit holder, its partners or shareholders, changes on the address data of the service stations, corrections to the permits due to omissions or minor errors, changes in the corporate structure that do not imply change of control and registration or cancellation of products to be retailed.

Particular considerations of the Preliminary Draft

The Preliminary Draft foresees that pending permit applications will be resolved in accordance with the provisions of the Preliminary Draft. For this purpose, applicants must submit, within a maximum period of 90 calendar days, the information that complements the requirements of the procedure according to the type of permit requested.

Finally, it is important to mention that the Preliminary Draft constitutes only a draft of regulation on the aforementioned matter; therefore, the final version of the regulation may have changes with respect to what was published by the CRE, as part of its regulatory improvement process.

_{¹ Available at: https://cofemersimir.gob.mx/portales/resumen/54046.}

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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