PEMEX Pays Lowest Taxes In DecadesBy Pedro Alcalá | Wed, 05/05/2021 - 08:33
SHCP has issued its official record on Mexico’s public finances for 1Q21, revealing that PEMEX is now operating under a historically low tax rate.
The NOC paid US$2.65 billion in taxes, which represents 17 percent of its income. Both of these numbers are considered the lowest levels in the last two decades, reported El Economista. This 17 percent resulted from an original tax burden of 28 percent which was reduced by 11 percentage points through a federal government decree issued earlier this year. This has been the last of many consecutive years in which PEMEX has been subject to a lighter tax burden than the year before, dating back to 2012, when the NOC paid taxes equivalent to 60 percent of its income. A large part of this reduction was achieved by reducing the tax on each oil barrel sold; 60 percent of what was made from each barrel used to go to the state, but that was reduced to 54 percent. Income from crude exports also grew by 19 percent thanks to higher oil barrel prices, recovering global demand and a more positive exchange rate situation between the peso and the dollar. These factors combined to produce a favorable financial result for PEMEX in this quarter when compared to the first quarter of 2020. Despite these reductions in taxes, PEMEX continues to be Mexico’s largest contributor to the federal budget. Losses also decreased dramatically; PEMEX reported losses of US$1.84 billion for this quarter, which compares favorably to its US$27.78 billion in losses in the first quarter of 2020.
However, these victories came at a cost for other government branches. A second report from El Economista details that the SHCP document demonstrates that SENER spent US$3.16 billion during this quarter, which represents a 213 percent increase when compared to last year. This was mostly due to the fact that it was SENER that paid for additional support packages for PEMEX, which were ordered back in February, to the tune of US$1.58 billion. The only government department that saw a higher percentage increase in its spending was SEDATU, which increased by 417 percent. SENER’s budget also went above the limit of what had been originally approved, given the fact that these PEMEX payments were suddenly announced and executed in the middle of February. PEMEX’s spending also increased by 22 percent during this same first quarter of the year when compared to last year’s first quarter.
Although PEMEX is in a favorable position as increased production and higher oil barrel prices translate into higher revenue, it must also be considered that the NOC is winding down its crude exports as more oil gets redirected to the national processing capabilities of Mexico’s refining system. A third report from El Economista finds that during the first quarter of 2021, PEMEX exported less than one million barrels a day on average, a threshold that had not been crossed in a decade. Furthermore, a report from Milenio details the fact that the National Refining System processed an average of 747,000 barrels a day during the first quarter of 2021, which represents an increase of 205,000 barrels a day over that same average in the first quarter of 2020. This is credited directly to the many renovations and rehabilitation projects taking place across the entire National Refining System.