Tuesday, June 18, 2024

Pemex to cut at least 16,000 jobs after going over budget last year

More than 16,000 Pemex workers could lose their jobs this year as part of cost-cutting measures at the beleaguered state oil company.

Pemex said in a 2019 budget document that it was forecasting adjustments to the size of its workforce to reduce costs.

The state-run company planned to operate this year with 111,855 employees but finished 2018 with 128,021 workers, 16,166 more than the number for which it budgeted.

The Pemex board has set a budget ceiling of 90.83 billion pesos (US $4.7 billion) in 2019 to pay salaries and benefits to current workers and pensions to retired ones – 3 billion pesos less than last year.

Other cost-cutting measures planned by the company include reducing the number of trips taken by employees to attend conferences and meetings, eliminating air travel in first and business classes, installing motion sensor lights at its facilities and suspending the vehicle leasing program for high-ranking officials.

Pemex has debt in excess of US $100 billion and its oil production has been declining for years.

To reduce its financial burden and strengthen its capacity to invest in exploration and production, President López Obrador announced a 107-billion-peso (US $5.5-billion) rescue package for Pemex last month.

The president said the state-run company will receive a cash injection, its tax burden will be reduced and it will be cleansed of corruption.

However, financial institutions rejected the bailout package, describing it as insufficient and disappointing, while Fitch Ratings warned that it doesn’t insulate the state oil company against future cuts to its credit rating.

Now there are reports that three independent board members are planning to resign because they disagree with López Obrador’s strategy for managing the company.

The Wall Street Journal said in a report published today that board members María Teresa Fernández, Carlos Elizondo and Octavio Pastrana plan to leave the company within weeks.

Sources told the newspaper that the three board members “have grown increasingly at odds with the government’s strategy.”

One concern is that the López Obrador administration didn’t provide a technical analysis to the board for the new refinery at Dos Bocas, Tabasco, to support the project’s profitability.

There are already two vacant seats on the 10-person board that approves Pemex’s business plan, meaning that the government would be able to appoint all five new independent board members.

The other five board positions are filled by the energy and finance secretaries and other government officials.

The Journal said that that the three imminent departures could give López Obrador “tighter control over Pemex as he seeks to shore up the state firm’s dominant role in an oil industry that was opened to private and foreign investment in 2013 as part of a broad energy sector overhaul that he opposed.”

Source: El Universal (sp), El Financiero (sp) 

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