The following report describes Mexico’s demand for equipment for the nuclear energy industry for the generation of electricity.
Mexico’s demand for electricity is estimated to increase from 52,520 Mega Watts at the end of 2011 to 78,248 Mega Watts at the end of 2025. Mexico’s electricity is generated by various technology sources, including nuclear energy. Nuclear Energy generation at the end of 2011 will reach 2.0 percent of the total electricity generated by the Federal Electricity Commission (CFE). Plans to increase the present nuclear energy capacity is already considered besides the generation of electricity by renewable energy sources, coal, turbo gas, combined cycle, LNG, internal combustion, and coke.
U.S. exports to Mexico of nuclear energy equipment and services are expected to increase from USD518.9 million in 2010 to USD539.6 million at the end of 2011.
Mexico has a government owned electric power company called the Federal Electricity Commission (Comision Federal de Electricidad-CFE) which is responsible for maintaining, increasing the capacity of electric power generation, and providing the electricity in urban and rural areas of the country. CFE administers the operation of a Nuclear Plant with two reactors located in the municipality of Alto Lucero, State of Veracruz.
Mexico’s nuclear energy program started in 1972 with discussions among Mexican scientists and U.S. scientists encouraged by CFE officials. By 1988 CFE and General Electric started running the tests for the two reactors. By the end of 1989 the first reactor was certified and the second by the end of 1993. The firs reactor started generating electricity in the middle of 1990 and the second by the middle of 1995.
The electricity that is generated at the Laguna Verde Plant is interconnected to the CFE grid and reaches smalls towns in the State of Puebla and Veracruz. CFE estimated that at the end of 2010, five million Mexicans in 88,000 rural villages were not yet connected to the national grid and therefore lack access to a reliable supply of electricity.
Mexico is a member of the International Atomic Energy Association; participates in the Nuclear Non-Preliferation Treaty; Comprehensive Safeguards Treaty; Convention on Physical Protection of Nuclear Material; Convention on Nuclear Safety and Additional Protocols on Nuclear Energy. The figures in Table 2 show that the total market size for nuclear energy equipment will increase from USD910.9 million in 2010 to approximately USD937.7 million at the end of 2011.
Additionally, there is an expected 4.0 percent average increase from 2011 to 2012. Furthermore, imports from the U.S. will grow from USD518.9 million in 2010 to USD539.6 million at the end of 2011.
Best Prospects for the Nuclear Energy Equipment
Nuclear Reactors; Machinery and Apparatus for isotopic separation and parts; Fuel elements in casting with handling fixtures for nuclear reactors; Parts for nuclear reactors; Watertube boilers with a steam production; Vapour generation boilers with steam production; Super-heated water boilers; Central heating boilers; Condensers for steam or other vapour power units; Steam and other vapour turbines; Compression-ignition internal combustion piston engines; Hydraulic turbines and water wheels; Fire extinguishers; Lift and skip hoist; Escalators and moving walkways; Self-propelled graders and levelers, nuclear energy waste servicers etc.
CFE officials estimate that the assigned budget for 2012 for the operation/maintenance of the Laguna Verde Plant that includes the purchase of many of the above products and uranium is USD1.5 billion and it is estimated to increase in 4.0 percent by the end of 2013.
Key Suppliers and Competitors
General Electric, Westinghouse, Foster Wheeler, Babcock and Wilcox, Aggreko Energy, Allad Electical Group, AMBAR, Argos Electrica, S.A. de C.V., Eaton Electrical Mexicana, Electro Conductors Especiales, S.A. de C.V.,Hoffman Enclosures, S. de R.L. de C.V., Grupo Metalmex, Insovolta de Mexico, S.A. de C.V., Industrias Unidas, S.A. de C.V., Leviton S. de R.L. de C.V.. AENOR Mexico, Asistencia Servicios y Suministros Electricos, S.A. de C.V., Bajio Distribuidores Electricos, etc.
Third country firms usually have a representative in Mexico or have a strategic alliance with a local nuclear energy equipment firm. Many have actively promoted their interests during the last five years by participating in trade shows and technical seminars in Mexico’s leading cities. When shows and seminars are held in their countries, they may invite government officials and potential representatives to participate with all expenses paid. These visits include tours of the manufacturing plants, end-users, research institutions, which many times result in cooperation agreements, exchange of research information, and technical training programs.
There are no barriers for importing Nuclear Energy equipment, except nuclear reactors. However, the Mexican import law is very strict on the required documentation. Although it is not required, it may be advantageous when selling equipment to use a reputable customs broker to properly prepare the paperwork needed. The basic documents required include:
1) Import petition
2) NAFTA certificate of origin
3) commercial bill
4) insurance and freight bills
The products qualifying as North American must use the NAFTA certificate of origin in order to receive preferential treatment. The exporter or broker may issue such a certificate. It does not have to be validated or formalized.
Often, the decision to select nuclear energy equipment depends on the demonstrated commitment to after sale service. This has been the most effective tool that foreign manufacturers have used to penetrate the market. They offer to have replacements parts and maintenance personnel at the client’s facilities in no more than 48 hours after the service
Selling to CFE
To participate in CFE projects, companies are advised to become familiar with CFE programs and to find a local representative that monitors the domestic/international tenders governed by Mexico’s Acquisitions, Renting, and Services for the Public Sector and its Regulations (Ley de Adquisiciones, Arrendamientos y Servicios del Sector Publico y su Reglamento) and by the regulations of the World Bank and the Inter-American Development Bank (IDB).
To participate in CFE tenders, companies are not required but it is recommended by CFE officials to register (be in the directory) as a CFE supplier, either personally or through a local legal representative. As of September of 2011, a total of 11,400 firms were registered as Suppliers: 10,000 are local firms and 1,400 international firms. A total of 900 are U.S; 100 are from China; 100 from Canada; 180 from Germany; and the remaining 120 from Spain, Taiwan, and Japan.
To register companies must:
• Contact directly CFE’s regional offices, addresses are found in www.cfe.gob.mx/proveedores or in the CFE offices in Mexico City located in Rio Atoyac No. 97. Floor 8, Col. Cuauthemoc, 06598, Mexico, D.F. Tel. 011-5255-5229- 4400, Exts. 83428; 83429; 83430.
• Present the application with a copy of its articles of incorporation in Spanish, notarized in the locality where the firm has its office.
Please note that companies are responsible for renewing their bi-annual registration and are advised to review the list of tenders published on Tuesdays and Thursdays in the Mexican Official Gazette (Diario Oficial, www.compranet.gob.mx) and to follow the guidelines and requirements of the tenders for technical and financial proposals.
Types of Tenders
a) are limited to purchases between US$10,256 to US$153,846;
b) are limited to participation by Mexican suppliers (U.S. firms with Mexican joint ventures or local representatives/distributors are considered to be Mexican suppliers);
c) must have at least 50% local content;
d) must receive at least three national bid proposals (whether via invitation or public tender), or otherwise must be subject to international bid.
a) are required for purchases above US$153,846; (under NAFTA, above US$250,000);
b) are required whenever Mexican suppliers cannot fill the requirements for a national tender;
c) are subject to applicable Free Trade Agreements;
d) are subject to conditions imposed by international financial institutions when the contracts include credits granted by them (World Bank, Inter-American Development Bank and EximBank); and,
e) have no local content requirement.
CFE is allowed to establish its own parameters. These awards are used for small purchases, and are very much like a sole-source procedure. The threshold for invitational tenders for small purchases is defined annually, typically ranging from US$833.33 to US$17,692.00 dollars, for machinery and equipment respectively. They also can use invitational tenders for emergency tenders.
Import Duties and Taxes
According to modifications made to the Mexican customs law in 1998, the involvement of a customs broker is not obligatory for imports if all legal and technical requirements are met. The same modification provided that, in order to import some goods, it is not required that the importer be registered as such with Hacienda, Mexican taxing authority. The participation of a customs broker is suggested when the exporter is not familiar with the Mexican standards and customs processing procedures.
All nuclear energy equipment from NAFTA countries is exempt from any import duties. For specific tariff information on non-NAFTA rates, contact the Commercial Service in Mexico City. A 16 percent Value Added Tax (IVA) is assessed on the cumulative value, which consist of the U.S. plant value (invoice) of the product, the inland U.S. freight charges, and any other costs listed separately on the invoice such as export packing and duties. The importer must also pay IVA for services including inland Mexico freight and warehousing. The VAT tax is only 11 percent for border area destinations and is recovered at the point of sale.