Mexico’s state-run energy company Pemex has a current debt of around $100 billion making it the world’s most indebted oil firm.
Pemex and its financial woes are proving to be a headache for Claudia Sheinbaum, Mexico’s newest President and self-professed “environmentally conscious leader”. The environmental scientist, who came to power on October 1, has inherited a government which is locked into fossil fuel contracts and riddled with outdated environmental laws.
According to Fernanda Ballesteros of Mexico’s Natural Resource Governance Institute, the actions of Mexico’s previous President, including a number of cash injections, have forced President Sheinbaum to continue assisting with Pemex’s huge debt. “President López Obrador’s policies and priorities were to double down on fossil fuels and give unconditional support to Pemex,” Ms Ballesteros said. The López Obrador administration also controversially reduced the amount of tax Pemex had to pay the government, lowering payments from sixty percent to thirty percent.
The current Mexican government claims to be on course in its “total self-sufficiency” goal by 2025. However, Eugenio Fernández Vázquez calls the Pemex issue a “big challenge” for Sheinbaum. He says President Sheinbaum will need to find a balance, “Not just in dealing with the oil industry, which is huge in terms of Mexico’s GDP, but also in taking Pemex’s massive debt burden off the public’s shoulders,” the environmental expert explained.
Vázquez says Sheinbaum is left in a difficult position, needing to encourage Pemex to sell more of its products “which are obviously fossil fuels and oil-based, while at the same time addressing Mexico’s climate change responsibilities and dealing with urgent issues in our cities, like air pollution”.
By CEO NA Editorial Staff
