Monday, September 28, 2009
Judicial Abuse Charges against LPG Conglomerate
Energy Intelligence® Update 1, September 21, 2009)
The situation on the battleground where LPG (liquefied petroleum gas) interests use their access to power and public institutions
to harass natural gas distributors in Mexico is more or less the same as indicated in our report MEI 651 that was published
six years ago, in August 2003: It is still common that local officials—including the police—are employed to harass
and obstruct the legitimate business rights and interests of natural gas distributors.
In Mexico City and Guadalajara, where the opportunity
to expand service is the greatest for NG distributors, local officials routinely deny permits and act in arbitrary ways in
relation to granting permits and the scheduling of inspections. It has been reported also that on occasion police elements
have been sent to close down a NG work site.
These facts are intimately—and painfully—known to NG distributors (also
to Mexico's Energy Regulatory Commission, which finds itself unable to help), but the general
public in Mexico is blissfully ignorant of this tense situation.
With few exceptions, the Mexican press has chosen
to ignore the problem. One publication that has carried out extensive investigative journalism of the business practices of
LPG monopolies was met by a counterattack of lawsuits that sought damages for defamation ("daño
In response to lawsuits, filed mainly by subsidiaries
of the LPG conglomerate GRUPO Z, based in Guadalajara—the site of an Olympian struggle for market dominance of the lucrative
residential market—some local courts have ruled against the publication. The 13th Magistrate in the civil court of Guadalajara
has been particularly favorable to the claims of GRUPO Z.
On September 12, 2008, the journalists appealed to
the National Commission on Human Rights (www.cndh.org.mx), which a year later, on September 14, 2009, issued a ruling that criticized the findings and evidentiary
procedures of the local judges. A letter with recommendations of that date was sent to the chief of the state supreme legal
tribunal and to the director general of Pemex. It was recommended that state legal authorities carry out an investigation
of possible abuses in the application of justice, and that procedures be put in place to prevent such abuses in the future.
It was observed that Pemex has no procedures to guarantee
that the granting—or withholding—of advertising would not be used as a mechanism to influence editorial content.
The press office in Pemex (and other government offices
as well) closely monitor the national and international reporting on Pemex, and journalists and others who are critical of
"the system" (as the set of unwritten practices during the PRI era was called). On one occasion, in the early 1990s, an analyst
was told by an official in the Pemex press office that he had been the writer who had been the most critical of Pemex practices
during the preceding year.)
1. The authority of the Human Rights Commission to
influence Pemex conduct is limited. Indeed, in relation to the Commission's recommendations concerning the Usumacinta platform
accident of October 2007, in which 22 workers died, Pemex flatly rejected the recommendations (Boletín 058, Mar. 13, 2009).
2. The problem of judicial abuse in Mexico arises primarily
in relation to the Mexican legal stratagem known as the amparo: it is an order
obtained by a judge that suspends the action ordered by an agency of the government or suspends the findings or sanctions
to be applied in a civil or criminal case.
3. The obtaining of this form of what is sometimes
called "retail justice" is by means of illicit payments to the judicial agents or their representatives. This fact is universally
known in Mexico and abroad; but it seems that the government has never prosecuted a case of such abuse, nor has the Mexican
press documented one.
4. The reports by Contralínea
and Fortuna against the irregular and illegal business practices of GRUPO Z exposed
even more of its irregular and illegal practices: namely, the buying off of judges to issue warrants (for the arrest of the
editor in one instance) favorable to the litigants.
5. Of all of the above, the CNDH is silent. Its language
is cautious: the Jalisco supreme tribunal is enjoined to "investigate," and, where warranted, take "disciplinary" measures.
6. The problem with passing the ball to authorities
in Jalisco is that the problem is national; but it may be the case that the legal authority of the Commission does not
extend to calling for a change in the law or in national political institutions.
7. The editor of the magazines complained that, in
effect, he has been blackballed by Pemex, that is, arbitrarily excluded from being awarded advertising contracts as yet another
means to influence the editorial content of the magazines.
8. This entire topic is apparently so scary to the
Mexican media that even the editorially brave (if often misguided, at least in relation to energy policy) daily La Jornada took notice of the recommendations of the Commission in relation to the complaints of the journalists
and publisher of CONTRALÍNEA and FORTUNA (9/20/09). But the newspaper did not interview the journalists, the publisher or
in any way commit to the possibility that the alleged abuses are not only true but widespread.
9. This entire situation makes the operating environment
for investors in natural gas distribution risky, as, in effect, the Mexican press is pledged to silence in relation to abuses
of law, policy and human rights.
• • •
in Mexico: LPG vs. Natural Gas
Energy Intelligence®, published 8/23/2003
This report examines the ongoing struggle by natural
gas distribution companies (LDCs) to extend their pipeline system within their franchise areas in the face of local neighborhood
opposition believed to be organized by LPG distributors. In relation to public policy, the report notes the lack of public
education at the local level related to matters of energy policy, such as the advantages of natural gas compared to LPG.
SUMMARY pg. 1
Gas distribution and culture in Mexico
Privatization of natural gas distribution systems
Public tenders for natural gas distribution franchises
Public education in energy policy 4
Fair trade oversight 5
Market structure 5
REPORT DISCUSSION 6
Types of incidents faced by natural gas LDCs
LDC progress in gas installations 5-year report
Future of LPG regulations 8
Family and social costs of LPG service
Reactions of natural gas distributors to LPG competition
CRE bid criteria 9
Public education in energy policy 10
Fig. 1 LPG consumption per capita by region in 2001
Fig. 2 LPG and Natural gas in residential market, 1995-2001
Fig. 3 Cost elements of LPG residential service
Related reports 15
Product notes and disclaimer 16
(MEI 651 Gas Distribution in Mexico: LPG vs. Natural Gas, published 8/23/2003)
George Baker is the director of Energia.com, a publishing and consulting firm based in Houston. He
can be reached via e-mail at email@example.com.