Mexican President Andrés Manuel López Obrador (AMLO) announced on Tuesday, Feb. 5, that the state-run oil company Petróleos Mexicanos (Pemex) will receive special fiscal discounts in order to help make the company financially viable.

“The Treasury Secretariat is placing far too many taxes on Pemex,” AMLO told reporters during his daily early morning press conference at the National Palace.

“Pemex pays more tax than any oil company in the world, and we need to leave it sufficient resources for it to be able to recover its production output.”

The president went on to give an example in which he pointed out, in some cases, the Mexican oil giant pays as much as 95 percent of its earnings in federal taxes and duties.

“We are going to take that fiscal weight off Pemex,” he said, adding that, within the next few days, his administration will be announcing a series of “extraordinary measures” to help the financially crippled oil giant regain its economic footing.

AMLO said that the reduction of tax revenues generated from Pemex would hurt the federal budget, but that the loss of income would be compensated through austerity measures now underway.

At $107 billion, Pemex’s debt is the highest of any national oil company in Latin America, and in late January, the U.S.-based Fitch credit rating agency downgraded its stock value two notches, from BBB+ to BBB-, just a peg above junk.

The move angered AMLO, who responded by accusing Fitch of being “hypocritical” and compliant in the financial mismanagement that occured under former Mexican administrations.

Before announcing the concessions, López Obrador spent 20 minutes telling reporters the history of Pemex, emphasizing that, “in Mexico, unlike in the United States, oil belongs to the people.”

In March 1938, then-Mexican President Lázaro Cárdenas signed an order to expropriate the assets of foreign oil companies operating within the country.

Cárdenas later Pemex, and oil became a political sacred cow until former President Enrique Peña Nieto opened the door to some foreign investment through his Energy Reform in 2014.

AMLO has sharply condemned that reform package, insisting that foreign investment has not major place in Pemex.



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