151. Conditional Support for Pemex: Achieving Financial Sustainability During the Energy Transition
- Author:
- Fernanda Ballesteros, Andrea Furnaro, David Manley, and Alejandro Chanona
- Publication Date:
- 11-2024
- Content Type:
- Special Report
- Institution:
- Natural Resource Governance Institute (NRGI)
- Abstract:
- Mexico must reform its financial support for the national oil company, Pemex. Since 2013, the state has given 2.8 billion pesos (about USD 140 million) to Pemex. This support has made Pemex dependent on the state and has led to inefficiencies. In 2025, there is a window of opportunity open to reform state support for Pemex. Mexico’s new government has taken office and will write a new Federal Expenditure Budget, following constitutional reform that has changed Pemex into a Public State Company. There is mounting pressure for reform in the next round of debt refinancing for Pemex. The company’s USD 100 billion debt is alarming creditors, leading them to require higher interest rates from Pemex. Before granting another round of state support, the government should establish clear conditions for such funding. International experience—for example, from Eskom, the state electricity company in South Africa—shows that conditionality contributes to financial sustainability for state-owned businesses. Eskom’s experience offers lessons on how to design and administer support for Pemex. A powerful condition for support could be that Pemex assesses and mitigates the risks for its business stemming from the global energy transition. This could involve scenario planning; aligning its business plan with the country’s climate plan; implementing a just transition plan for oil-producing regions, and managing the closure of petroleum infrastructure.
- Topic:
- Oil, Sustainability, Energy Transition, and National Oil Companies
- Political Geography:
- Latin America and Mexico