Mexican president moots $1.5bn rescue plan for Pemex

9th February, 2019 09:09:00 printer

MEXICO CITY: Mexican President Andres Manuel Lopez Obrador said Friday he would soon announce a rescue plan for troubled state oil company Pemex, suggesting it would be worth around $1.5 billion.

Pemex is struggling under the weight of more than $100 billion in debt and years of declining production, and was recently downgraded by ratings company Fitch.

Trying to shore up the firm, Lopez Obrador’s government has announced a series of tax breaks for Pemex — and will now announce further measures next week, the leftist leader said, reports AFP.

“The decision has already been made. We are going to strengthen Pemex, to rescue Pemex, to make it solvent,” he told a press conference.

He said the plan would include further reducing the company’s fiscal burden, and did not rule out a cash injection.

As of Thursday, the total amount of rescue money under discussion was “around $1.5 billion,” he added.

In its downgrade note, Fitch estimated Pemex needed an additional $9 billion to $14 billion annually to get back on its feet.

“Because of bad management by previous governments, which took away all its revenues with high taxes, Pemex was left in the situation it’s in,” said Lopez Obrador, who took office in December after running an anti-establishment campaign.

Lopez Obrador had previously announced an increase of $3.7 billion in Pemex’s budget. The recently announced tax breaks are meanwhile estimated to be worth around $3.5 billion by 2024.