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Analysis

PEMEX’s Future as a Productive Enterprise of the State

Wed, 01/22/2014 - 15:47

One of the clauses included in the Energy Reform that most surprised Fluvio César Ruiz Alarcón, Professional Board Member of PEMEX, was the formal introduction of the productive enterprise of the state concept. “Both PRI and PAN had talked of treating PEMEX as a company, but only PRD and the left-inclined politicians made a proposal concerning the legal confirmation of PEMEX as a productive enterprise of the state,” he recalls. Besides the elements of autonomy that should be included in the legal constitution of this new entity, there are certain characteristics that surround the figure of a productive enterprise of the state. The government is defined as the main stakeholder, with six public servants on the Board of Directors of PEMEX. Currently, these are Pedro Joaquín Coldwell, Minister of Energy; Luis Videgaray Caso, Minister of Finance and Public Credit; Ildefonso Guajardo Villarreal, Minister of Economy; Lourdes Melgar Palacios, Undersecretary of Hydrocarbons of SENER; Leonardo Beltrán Rodríguez, Undersecretary of Planning and Energy Transition of SENER; and Miguel Messmacher Linartas, Undersecretary of Income of SHCP. The approved version of the Energy Reform states that PEMEX’s main objectives are the increase of production, a 100% reserve replacement rate, and the equal distribution of energy wealth throughout the country.

Even though there are no plans to sell part of PEMEX’s ownership to private stakeholders after the Energy Reform, PEMEX will have a yet-to-be-defined autonomy in management and budgetary decisions, allowing it to focus on value creation, as evidenced in Round Zero. As a Mexican productive enterprise of the state, PEMEX will still have to respond to its main stakeholder, the government, and to the public by abiding by transparency regulations. The key for PEMEX’s real conversion into a public enterprise, according to Ruiz Alarcón, is that all the characteristics of a proper company are conferred to the oil giant. “This implies several changes to our legal framework, which is still one of the main subjects under discussion,” he says. “We have to guarantee that SHCP understands budgetary autonomy in the same way as PEMEX understands it, and thereby grants PEMEX the management and budgetary autonomy it needs to succeed in its mission to maximize value creation.”