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 Business News | September 2005 
Fox Sends Pemex Tax Reform Back to Congress
 Associated Press
Mexico City – Mexican President Vicente Fox has sent a tax-reform proposal for state oil monopoly Petroleos Mexicanos, or Pemex, back to Congress for revisions.
Fox shares the objectives of the reform, which was designed to help Pemex direct more funds to invest in exploration, production and other operational activities, a news release from the Interior Department said.
Nevertheless, the president felt that concerns expressed by state governors – that the measure would hurt their finances – should be taken into consideration, the release said.
Mexico's lower house of Congress passed the bill, which had been drafted by the Senate, in June. Fox had until the end of August to sign it into law, although aides at the time said he would send it back for changes.
The new rules would give Pemex a lower tax rate on oil and gas production from new projects, where fresh investments raise costs compared with expenses at established operations.
Pemex estimates the new tax treatment would save it more than US$2 billion (euro1.6 billion) in 2006, and as much as US$13 billion (euro10 billion) over four years.
But Eduardo Sojo, who heads the presidential office of public policy, said recently that the government calculated the effect on next year's federal and state finances at closer to $6.5 billion (euro5.2 billion) .
Pemex pays out about 60 percent of its annual sales to the government, while oil revenue and related taxes account for around a third of federal government income. Last year, the company reported sales of US$70 billion (euro56 billion).
The high tax rate has forced Pemex to rely increasingly on funding from capital markets and other lenders as it tries to maintain crude production of 3.4 million barrels a day.
At the end of June, Pemex's total debt stood at US$46.4 billion (euro37 billion). |
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