PEMEX Reinforces Austerity Measures

PEMEX has tightened its internal austerity measures as part of broader efforts to stabilize its finances, following continued operational challenges and structural changes to its tax regime. The new austerity policy, approved during the company’s 1034th Board of Directors session on Feb. 26, 2025, mandates cost-cutting across electricity, water, and materials consumption.

According to official memo CA-001/2025, the measures will be applied through PEMEX’s Corporate Services Subdirectorate and its subsidiaries. The strategy includes removing underused electrical equipment, installing motion sensors, preferring low-consumption lighting, disconnecting devices once fully charged, and ensuring full office shutdowns outside working hours. Managers are instructed to promote awareness of energy efficiency among employees.

Water-saving fixtures will be installed in restrooms, and regular inspections will be conducted to identify leaks. The use of office supplies, including photocopiers, is now restricted and permitted only for official use. According to employee testimonies published by Proceso, some of these restrictions have been implemented strictly. In certain work centers, employees reported being required to request permission to use the restroom. These controls reportedly began at the managerial level but have since expanded across other departments.

These measures come in response to PEMEX’s continued financial strain. In 2024, despite a reduced tax burden, the company reported losses of MX$620.6 billion, its second-largest annual loss in at least 14 years.

A new fiscal regime for PEMEX came into effect following a reform to the Hydrocarbons Revenue Law approved on March 5, 2025. The reform replaced multiple levies with a single tax, the "Oil Welfare Duty" (Derecho Petrolero para el Bienestar, DPB), eliminating the Shared Profit Duty (DUC), the Hydrocarbons Extraction Duty (DEXTH), the Hydrocarbons Exploration Duty (DEXPH), and corporate income tax (ISR).

According to the Mexican Institute for Competitiveness (IMCO), the reform is unlikely to be neutral for public finances. IMCO estimates the change will lower PEMEX’s fiscal burden, enabling it to retain a larger share of oil revenues. While this could improve the company's financial margin, it may reduce federal revenue for programs and public investment.

The government has argued that the new fiscal design will not impact the national budget. However, IMCO emphasized that PEMEX’s structural inefficiencies pose a larger risk. Without reforms to improve operational performance, the company is likely to remain dependent on public support, drawing resources from other sectors such as infrastructure, health, education, and public safety. IMCO also warned that reduced tax obligations might not translate to better profitability unless PEMEX reallocates freed-up funds toward more profitable areas like exploration and production instead of refining.

In parallel, Mexico’s broader fiscal outlook has drawn caution. Fitch Ratings recently reaffirmed the country’s credit rating but flagged significant risks. The agency cited a record-high public sector borrowing requirement (RFSP) of 5.7% of GDP in 2024, driven by higher social spending, megaprojects, rising interest rates, and PEMEX’s losses.

The federal government aims to reduce the fiscal deficit to 3.9% of GDP in 2025 through sharp cuts to capital expenditure and widespread austerity, including in priority sectors. However, Fitch expressed skepticism regarding the feasibility of such measures, warning that expected interest rate declines may not materialize and that social commitments and budgetary inflexibility may limit the effectiveness of austerity plans.