Mexico Finance Ministry to prepare Pemex support plan

Bloomberg

Mexico’s Finance Ministry is preparing a support plan for Petroleos Mexicanos and studying all potential options, including a capital transfer or reducing the company’s tax burden, chief economist Luis Madrazo said.
Capital aid for Pemex could come from part of the special revenue that the government will receive from the central bank’s operational surplus, Madrazo said in an interview in Mexico City. While the government should receive those funds by the end of April, Madrazo declined to say when support measures will be announced, saying they’re still being prepared.
Mexico has been focusing on ways to turn Pemex around after a record $32 billion loss in 2015 and 11 straight years of production declines. The company last week pledged to meet the government’s demand that it trim its 2016 spending by 100 billion pesos ($5.6 billion) by increasing efficiency and focusing on its most profitable
projects.
“Everything is under consideration,” Madrazo said. “We need to align the effort we make to make life easier for Pemex, and by that I mean give them an incentive scheme going forward to keep them on the straight and narrow and to improve things.”
The Finance Ministry wants to see that Pemex has a plan for reducing inefficiencies, Madrazo said, echoing comments by Deputy Finance Minister Miguel Messmacher in January that the company needs to show it can lower costs, make better investments and accelerate partnerships with other firms.
Pemex has been struggling after the price for Mexico’s oil exports fell 66 percent in the past 18 months amid a slump in global crude prices.