Mexico caps LPG price 10pc below late June level

Mexico's energy regulatory commission (CRE) set maximum retail prices for LPG for the first time since an historic energy reform opened the market to more competition.

Private-sector distributors, who handle all retail sales, have until tomorrow to comply with reducing their prices to at or below levels for each region.

The average of the CRE's 2,490 city-specific caps was Ps12.21/l ($2.31/USG) or Ps22.61/kg, which was 9.6pc below the last available average price reported to the CRE by retailers of Ps13.52/l ($2.56/USG) on 30 June.

The northern state of Durango has the highest cap of Ps15.04/l, while the lowest limit is in the state of Baja California, with Ps10.56/l.

Distributors have said they will go to court to fight the new limit, as well as other recent changes including new customs rules that would prevent them from importing LPG without the participation of a state-owned company once their current permits expire. State-owned Pemex has also said it will enter the retail market with a new state LPG distribution company that will offer LPG at "fair" prices.

Mexico imported about 8.52bn l (53.4mn bl) of LPG in 2020.

The formula adds an average sale price, logistics costs, profit margin and an adjustment based on different market conditions known as the K-factor. The CRE did not detail each component.

The CRE listed the price per liter and per kilogram for each of Mexico's 2,490 municipalities in the country, divided into 145 regions, on 52 pages.

These prices will be valid from tomorrow until 7 August when the next set of prices will be published.

By Sergio Meana