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Introduction

In light of the existing problems in the Mexican energy sector, reform that would allow Mexico to transition from a monopolistic and closed energy model to an open one was urgently needed. In December 2013, the constitutional reform in energy matters was approved by the Mexican Congress. This reform was completed on August 11, 2014 with the promulgation of the secondary legislation. Currently, the reform is at the implementation stage, a period in which local governments perform a very relevant role. The purpose of this essay is to discuss the role of local governments in Northeast Mexico in the new energy sector, as well as the implications each faces as a result of the reform. This role is discussed based on a governance model for the implementation of the reform that describes the critical roles performed at this stage by the different strategic players in the northeast region (politicians, private, and civilian players), as well as the relationships of cooperation between local governments and such players.

This essay comprises six sections. The first presents a brief overview of the entities that make up the northeastern region of Mexico: Coahuila, Nuevo León, and Tamaulipas. The second section briefly reviews some central aspects in the literature regarding the implementation of public policy, based on the classic hierarchical model and the focus of governance. The third section presents and explains the governance model for the implementation of the energy reform in the northeastern region of Mexico. The fourth section discusses four implications of the energy reform on the local governments of Northeast Mexico, which will allow them to face the important challenges arising out of the reform: 1) a new tax for hydrocarbons exploration and extraction activities; 2) an ambitious package of investment projects by the federal government; 3) the requirement for companies to submit social impact evaluations for projects in the hydrocarbons and electrical industries; and 4) a national content policy within the scope of hydrocarbon assignments and contracts. This essay ends with a discussion of the role local governments in the northeastern region may assume in the energy sector based on the governance model that is proposed and an examination of the public policy implications.

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