Mexico has announced a plan to simplify the tax payment system for state oil producer Pemex, in an effort to prop up the company whose heavy debts have weighed on state coffers.
During her Wednesday morning press conference, President Claudia Sheinbaum said her administration would consolidate Pemex’s tax requirements, merging three existing taxes into one.
Sheinbaum said the move was aimed at “transparency” and giving the oil company more room for investment, according to the news agency Reuters. The plan was announced just two days before the government was due to submit its 2025 budget plans to Congress.
“We have to fix Pemex,” Sheinbaum said, explaining that the new plan “would seek to cut inefficiencies, diversify energy sources and pay down debt while protecting output levels.”
The goal is for Pemex to increase estimated oil reserves, increase natural gas production to 5 billion cubic feet per day and maintain hydrocarbon production at 1.8 million barrels per day.
Company officials have also been charged with increasing storage capacity for refined products like gasoline and diesel.
To address the debt, new Pemex director Víctor Rodríguez has been placed in charge of an austerity drive that aims to slash 50 billion pesos (US $2.44 billion) in costs. In part, the cuts would target administrative inefficiencies, including the elimination of several of the more than 40 Pemex subsidiaries.
Rodríguez told reporters he did not expect Pemex to turn to international debt markets to shore up its financing as the company works to pay down its debts, although Sheinbaum did not rule out refinancing Pemex debt in the future.
According to Reuters, Pemex — which The Economist last year called ”the world’s most indebted oil company — carries financial debt of nearly US $100 billion and service provider debt of about US $20 billion.
The debt has been a drag on the company’s value for years. As of Sept. 30, 2011, the company had a net worth of 118 billion pesos (US 5.8 billion). Thirteen years later in 2024, the figure has sunk to a negative $1.74 trillion pesos (US $85.5 billion), according to Mexico Business News.
The new Pemex strategy was announced just two weeks after the oil company reported a net loss of 161.33 billion pesos (US $8.04 billion) in the third quarter of 2024, mainly due to a decline in the value of the Mexican peso against the U.S. dollar.
Revenue for Mexico’s biggest company during the July-to-September period was down by nearly 8% year-on-year due primarily to lower crude oil export sales.
While the Sheinbaum administration was said to be considering a new business model for Pemex in hopes of attracting investment last month, Congress was working on a constitutional reform.
The reform — enacted on Oct. 29 — returned the lead role in Mexico’s energy sector to Pemex and the Federal Electricity Commission (CFE), also a state-owned company.
It also converted Pemex and CFE into “public companies at the service of the State,” instead of productive companies that prioritize revenue generation.
With reports from El Economista, El País, Reuters and Animal Político
