Alliance
ANALYSIS / ANĂ LISIS
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The bidding guidelines as well as the model license templates are available for review on the NHC’s website, ronda1. gob.mx. The timeline for the bidding process is summarized in the graph below.
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So far, 23 companies have expressed interest in participating in Round 1.4., from which nine have already begun the prequalification process.3
Environmental risks.
Though the nine companies already in process of qualifying are publicly traded and thus subject to funding from the capital markets, other service integration companies could also benefit from such financing, especially considering that Mexico has already issued an energy investment vehicle for pipelines and storage facilities known as Fibra E which mimics U.S. master limited partnerships (MLPs) which pose different investment opportunities.
The new Environmental Liability Law enables condemnation to punitive and consequential (indirect) damages for the first time in Mexico; hence, even though the model contract effectively assesses the responsibility for ensuring environmental safety to the contractor, what is not spelledout in the contract is that contractors will become liable not only before the NHC, but also before the populations that could be affected by an environmental accident, as well as by non-governmental organizations and federal and local environmental protection agencies. Thus, while assessing and reporting to the public their risk exposure, companies must consider that there are no precedents
Investors should consider that there are certain aspects that are not fully disclosed in the contracts being offered when assessing their risk exposure and consequently when reporting to their investors and the SEC.
in Mexico on how to determine limitations to punitive or consequential damages. To this extent, both the initial transition period, as well as the relinquishment of the awarded areas become of the utmost importance since the contractor will assume any and all environmental liabilities that are not disclosed to the NHC.