“Once. Only this year. Later on, that’s their problem”: Finance Minister. $3.4 billion in fuel was stolen in 2018, including by insiders. Crackdown now underway.
After years of falling production, compounding losses, and plunging credit ratings, Pemex, the world’s most indebted oil company, is not in a fit enough shape to issue new debt. That’s the dire assessment of the Mexican government, which on Friday announced that it was extending its embattled state oil company yet another financial lifeline, this time worth 107 billion pesos ($5.7 billion).
It’s a drop in the ocean compared to the $106 billion of total debt Pemex owes its creditors. But it should be enough to tide the company over at least for the rest of this year, allowing it to finally pay providers, many of whom complain they haven’t been paid since December.
Pemex has not issued any debt so far this year, fearful that recent downgrades by Moody’s and Fitch to just one notch above junk may have hurt investor appetite. To lend a helping hand, the government dipped into Mexico’s budget stabilization fund, which was set up ostensibly to cushion the effects on public finances if there are sudden variations in international oil prices. The fund’s coffers are now roughly a third lighter, having lost 106 billion pesos of the roughly 300 billion pesos they held.
The government insists that this is the very last time it intends to bail Pemex out, although no one seriously believes it. “What we want to do is to allow Pemex not to go to the market if they don’t want to go to the market,” Finance Minister Carlos Urzua said at an event at the IMF World Bank meetings in Washington. “Take off part of its debt. Once. Only this year. Later on, that is their problem”…