Changing of the guard at Pemex: more of the same or light at the end of the tunnel?
Claudia Sheinbaum doesn’t waste time. Just one day after S&P gave Pemex a “risk” label, the president announced a new director. Juan Carlos Carpio Fragoso, the finance man, takes the helm. Víctor Rodríguez goes to his classes and to the clean energy institute. Nice move, but the question that hangs in the air is: is it enough to change the name on the door?
“Its capital structure is unsustainable, given its low liquidity and high leverage”
That’s what S&P says. And it’s not hallway gossip. It is the stark x-ray of a company that carries a debt of 84.5 billion dollars. Yes, you read that right. Almost half of the expenditure budget for an entire year. The good news is that it was down 13.4% compared to the previous year. The bad news: it only went down because the Treasury injected $22,647 million to repurchase debt and pre-capitalized notes. In other words, the government paying its own way.
Production is around 1.6 million barrels per day. Nothing to do with the glory years when Pemex contributed up to 40% of the federal budget. Today it barely reaches 15%. And Sheinbaum promised an “austerity” plan to save $2.5 billion by cutting costs and eliminating subsidiaries. It sounds nice, but history has taught us that at Pemex austerity announcements usually last a breath.
Carpio Fragoso knows the numbers. It comes from Finance. Maybe that’s just what the oil company needs: someone who knows how to add and subtract, not just give speeches. But skepticism is healthy when we talk about a company that has been the punching bag of Mexican politics for decades.
The truth is that the outlook does not look easy. S&P also lowered its outlook for Mexico due to slow growth and increased public debt. Everything is connected. And as long as Pemex fails to produce more and spend less, the director changes will be just that: name changes in an organizational chart that needs major surgery.
