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Mexico unveils $5.5-bn rescue plan for ailing Pemex
MEXICO CITY, Feb 16, 2019 (BSS/AFP) – The Mexican government said Friday it
would bail out ailing state oil company Pemex with $5.5 billion in additional
funds this year — though that falls short of what analysts say the firm
needs.
The money — a mix of cash, tax benefits, pension fund support and expected
savings — will help Pemex pay down its massive debt and invest more in its
flagging production, officials said.
The company, which owes $100 billion in debt, said it would also stop
taking out new loans.
“We have made the decision to support Pemex with everything we’ve got,”
said President Andres Manuel Lopez Obrador, a left-wing energy nationalist
who has made rescuing the firm a priority.
Concerns about Pemex — a key revenue source for Mexico — have raised
questions about the future stability of Latin America’s second-largest
economy.
The plan breaks down into $800 million in tax benefits, $1.3 billion in
cash and $1.8 billion in assistance paying the company’s massive pension
bill, officials said.
The remaining chunk consists of $1.6 billion in expected savings from
combatting theft from Pemex’s fuel pipelines — a massive black-market
industry in Mexico that has thrived with the help of corrupt officials and
company insiders.
Lopez Obrador’s government is currently waging a major crackdown on fuel
theft, which cost the country an estimated $3 billion in 2017.
Pemex’s chief financial officer, Alberto Velazquez, told a news conference
the company would use the rescue plan to increase investment by 36 percent
this year, to $14.9 billion.
The “vast majority” of Pemex’s debt under the previous government of
President Enrique Pena Nieto “was lost to inefficiency and corruption,” said
Finance Minister Carlos Urzua.
Analysts said the plan would probably not be enough.
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“The measures are not a long-term fix and won’t be enough to stabilize oil
output, which has halved since 2004,” said London-based consulting firm
Capital Economics.
Ratings agency Fitch, which recently downgraded Pemex, says the firm needs
an additional $9 billion to $14 billion annually to get back on its feet.
Urzua sought to downplay concerns, saying the government would back Pemex
“totally.”
“If more funds are needed to recapitalize Pemex, including this year, we
will do that,” the finance minister said.
BSS/AFP/SR/1940 HRS