Pemex to have more cash to invest post-reform, says CFO
Mexico’s energy reforms could leave the state-owned oil firm more cash to reinvest in its own operations, CFO Mario Beauregard tells LatinFinance
Mexico’s energy reforms will give Pemex more
scope for its own operations after years of underinvestment,
Mario Beauregard, the firm’s chief financial
officer, tells LatinFinance. Reforms passed late last
year effectively ended the state-owned firm’s
monopoly over Mexico’s oil industry.
Thanks to the reforms — the details of which are
being hammered out by Mexico’s legislature in the
coming months — new players would enter the sector and
"in a gradual process, Pemex will begin to invest only in those
projects and areas where it has a competitive advantage,"
Pemex’s operations had been hampered by tax
obligations before the reforms. But
Beauregard told LatinFinance in the March/April
edition he expects Pemex’s tax burden to decrease
gradually and organically thanks to the reforms.
||PEMEX: More resources for own operations -
Source: Matthew Rutledge
"To the extent that other players begin to generate
resources for the federal government, and not just Pemex, our
expectation is that Pemex will be left with more resources for
its own operations," he said. He did not, however, expect a tax
decrease in the short term, he said.
Letting private firms into the oil industry is consistent with
the spirit of the reform, advocates say. The legal overhaul
will classify Pemex as a "productive state enterprise"
(empresa productiva del estado) with looser links to
the government and greater autonomy over its budget and
In its new guise, the firm’s main priority will
be to maximize profit, not meet public needs.
But not everyone is fully satisfied with the reforms. Fluvio
Ruiz, one of the four professional members of
Pemex’s board of directors, said the bill
explained how the new competitive oil sector would work but
failed to detail Pemex’s future.
"The government showed no explicit will to lower
Pemex’s tax burden nor did they guarantee that
there won’t be fiscal or regulatory asymmetry.
That’s the big absence in the bill," he said.
Lowering taxes had little point if Pemex did not have true
budgetary autonomy, he added.
Pemex issued its largest ever bond, selling a $4 billion
dollar-denominated note with demand four times the amount sold.
Beauregard said: "The bond is clear evidence of the benefits
investors are seeing in this reform, not only for Mexico but
for Pemex as well." LF