PEMEX’s Tax Contributions Undermined by Public Financial Support
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PEMEX’s Tax Contributions Undermined by Public Financial Support

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Perla Velasco By Perla Velasco | Journalist and Industry Analyst - Tue, 01/10/2023 - 13:48

According to the Mexican Oil Fund (FMP), PEMEX’s contribution to its shared utility right (DUC) fell by 34 percent in December 2022, dropping from MX$54.5 billion (US$2.85 billion) to MX$35.9 billion (US$1.88 billion), the second lowest contribution of the year. In April 2022, the NOC contributed MX$22 billion (US$1.15 billion), while its highest contribution of the year was MX$67.4 billion (US$3.53 billion) in March.

On the other hand, private contracts’ contributions increased by 4.8 percent over the same period. FMP’s transfers to the federal treasury amounted to MX$636.3 billion (US$33.36 billion), MX$250 billion (US$13.1 billion) more than in 2021 and MX$430 billion (US$22.54 billion) more than in 2021.

According to PEMEX CEO Octavio Romero Oropeza, the state company increased its production in 2021 while simultaneously decreasing its operational costs. Oropeza mentioned that PEMEX pays 5.6 times more taxes than the three biggest private companies in Mexico. “This demonstrates PEMEX’s importance to the country due to the resources that enter the public treasury,” Romero said. He promised that in 2023, for every MX$100 (US$5.24) of federal income, PEMEX will contribute MX$22 (US$1.15).

However, PEMEX’s financial results are supported by financial support from the government. According to the  Center for Research in Public Policy (IMCO), from January to September 2022, PEMEX received federal support of MX$809.8 billion (US$42.45 billion) for capital contributions, tax incentives and other assistance. “The figure received until September 2022 is 140 percent higher than the MX$45 billion (US$2.36 billion) originally estimated for all of 2022 in the Federation Expenditure Budget (PEF) for that fiscal year,” reads the report. Additionally, the DUC rate paid by the oil company fell from 65 to 40 percent between 2019 and 2022.

Last week, PEMEX announced that it was looking to negotiate to get financial support from the government, while president López Obrador declared that the government would help the NOC to pay its debt if needed, as the company was still in "recovery.” Romero said that the company was negotiating with the Ministry of Finance to obtain support for the payments due for 1Q23. PEMEX must pay around US$6 billion out of its US$105 billion debt for 1Q23.

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