On December 6, 2019, the Ministry of Energy ("SENER") published in the Federal Register ("DOF") the Order amending the resolution issuing the Public Policy on Minimum Storage of Refined Products (the "Amendment Order") originally published in the DOF on December 12, 2017 (the "Policy").
The Amendment Order amends the Policy in order to, among others: (i) reduce the minimum days of refined products compulsory stock obligations (the "CSO"); (ii) delay the effective date of the obligation to maintain the CSO; and (iii) establishes certain exceptions to the percentage of CSO that shall remain in storage terminals that regularly supply service stations.
Below is a list of the most relevant points of the Amendment Order:
- The holders of permits to trade and distribute gasoline, diesel and jet fuel ("Obligated Parties") granted by the Energy Regulatory Commission ("CRE") may, in cases of unforeseen emergency, address the emergency situation through the use of the minimum inventories without the need of an emergency declaration by the Coordination Council of the Energy Sector.
- It clarifies that the CSO exclusively apply to automotive diesel and not to other kinds of diesel:
- The number of CSO days for gasoline and diesel is reduced to remain at 5 days until 2025.
- The effective date of the CSO obligation (5 days) is delayed from January 1, 2020, to July 1, 2020.
- Obligated Parties that contracted storage capacity at terminals which commercial operation date is foreseen after July 1, 2020, shall comply with the CSO through the purchase of tickets.
- It repeals the provision of Section 5.3 allowing Obligated Parties that evidence to have executed a storage agreement no later than on the first semester of 2019 and that for reasons "out of their control" the commercial operation date of the terminal will occur after January 1, 2020 but before December 31, 2021, to defer their obligation to commence on the commercial operation date with 6 days for 2021.
- A different number of days of CSO is established for jet fuel, reducing it to 1.5 days as of 2020 and until 2025.
- In case that the Obligated Parties evidence that the storage capacity at the terminals that regularly supply service stations and end users via truck is not sufficient to comply with the CSO 50% requirement, the remaining percentage may be allocated in other terminals of the country.
- Given some of the inconsistencies in the actual language of the Policy, the Amendment Order seeks to include the applicability of the obligations of the Obligated Parties that sell refined products to end users and not service stations only (e.g. maintaining 50% of the CSO at terminals that regularly supply said end users and breaches regarding failure to supply end user in the event of emergencies).
- Expressly establishes that the interpretation of the Policy for administrative purposes, corresponds to SENER.
- The CRE is ordered to incorporate the Policy's obligations in the permits and regulations of gasoline, diesel and jet fuel trading and distribution activities. This means that the breach to such obligations, could potentially result in the revocation of the relevant permits.
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