The lack of human capital in the energy reform.

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The recent Congress approval of the political-electoral reform’s secondary legislation means that the agenda is ready to begin the same discussion process for the energy reform. The approval of this secondary regulation will determine its course and reach. However, more than its content, it is worth analyzing the lack of human capital within the energy sector as a factor that, despite not being a popular topic, will determine the reform’s success and continuity. The absence of human capital in the energy industry is a deeper matter than the absence of oil engineers or geophysicists; it has an impact on the electric sector as well as in the quality and autonomy of the regulating entities that will be essential in defining the energy reform’s ultimate benefits.
The lack of human capital in the Mexican oil industry is a problem caused by having a working staff that average 45 years old and do not possess enough youngsters to replace them. Over the next ten years, at least 20 thousand PEMEX workers will retire and will need for new generations to take their place. The government estimates that it will take between 20 or 25% additional experts in metallurgy, mining, oil and geophysics but the public sector does not have a clear diagnosis regarding the size and characteristics of this human capital deficit. The lack of talent is evident when remembering that in 2012 only 654 students graduated from oil engineering and less than 1% of those studying an engineering degree were involved with oil engineering. In addition, the number of graduates as well as the financing for the PhD Program of the Mexican Oil Institute has decreased by 60% from 2006 to 2011. The low amount of students in oil-related careers is due to the fact that the only available option was working at PEMEX, which is an unattractive alternative considering the monopsony that the aforementioned company represents. Due to the energy reform, the engagement of private companies in the sector will lead PEMEX to share the market and provide additional options for youngster in their search for employment and specialization. The future challenges lies in whether public institutions will be able to adapt to this new scenario and will develop quality education programs that will give students all the required skills by private companies and not only by PEMEX.
The challenges of human capital not only impact the oil sector; they are obstacles in the entire energy sector, including electricity. Legislation has pointed out that in the vertical separation of the system, the Federal Electricity Commission (CFE) should facilitate the management of the transmission network as well as the networks distributions to the National Center of Energy Control (CENACE). One of the main concerns about the latter’s functioning is whether it will be able to guarantee a non-discriminatory access to the transmission network taking into account that the technicians that operate the transmission network – once it becomes fully operational – previously worked for CFE. The main reason behind having the CFE technicians operating the network under CENACE is the lack of workers with the necessary skills to carry it out in a proper manner. In that way, the lack of talent and qualified individuals to become part of the new regulatory entities such as the National Hydrocarbons Commission or the Energy Regulating Commission puts the task of performing essential and highly specialized tasks in doubt, from bidding processes, managing contracts of exploration and extraction, appointing successful tenderers as well as supervising the sector.
Constitutional changes will serve little purpose if there is no one to operate the opening up the sector and if there is no strategy to create the necessary workers that will provide the reform with continuity. One of the most important ways – in the long term – to create this new repertory of human capital will greatly depend on the coordination between universities and companies, especially in those sectors that were not part of the Mexican energy scenario such as deep waters or shale gas. In that sense, universities ought to know the needs and characteristics of those industries in order to adapt their programs and provide their graduates with the skills that these companies will be looking for (such as mapping and drilling in deep waters); otherwise, the reform will lack enough human capital to actually transform Mexico’s energy sector.


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