By: Fluvio Ruiz Alarcón
The current government has implemented various measures to mitigate the difficult financial situation of Petróleos Mexicanos (Pemex). During the approval of the Expenditure Budget of the Federation for this year, a capital «injection» of 25 billion pesos was made through the Secretariat of Energy. However, given Pemex’s confiscated tax regime, this amount would be more of a tax refund than a real injection of fresh capital.
Let us not forget that, as a result of the economic crisis of 1981-82, the State modified the role of Pemex in the development model, in order to turn it into the main source of financial income. Since Ernesto Zedillo’s six-year term, Pemex’s tax burden has exceeded 100% of its net operating income. In other words, Petróleos Mexicanos has had to borrow only to pay taxes and duties to the Ministry of Finance. For this reason, what is needed is a thorough review of Pemex’s tax regime, contained in the Law of Income on Hydrocarbons (LISH), rather than temporary measures that seem intended to reassure the financial world.
This review could include, among other measures: the reduction of the Shared Utility Right (DUC), from 65% to 60%, within three years; the periodic updating of the deduction limit for each geological zone defined in the LISH, according to their respective production costs; the adjustment of the taxable base for the determination of the DUC, introducing deductions such as the self-consumption of hydrocarbons. The definition in the LISH of new zones of geological complexity with a specific fiscal regime (mature fields, ultra-deep waters, non-conventional deposits); the definition in the LISH of new zones of geological complexity with a specific fiscal regime (mature fields, ultra-deep waters, non-conventional deposits); the definition in the LISH of new zones of geological complexity with a specific fiscal regime (mature fields, ultra-deep waters, non-conventional deposits). The introduction of a percentage of cost recovery in favor of Pemex, similar to that granted in production and shared utility contracts; the elimination of the State Share; the creation of a special regime for non-associated natural gas, which makes its exploitation profitable; a new distribution of the collection surpluses and the modification of the rules of the Mexican Petroleum Fund and its Reserve.
However, in the long term, we will only be able to have a competitive national oil industry and company if they are supported by a solid scientific and technological foundation. It is inconceivable that our country, with more than a century of oil history, can only enter the international oil market thanks to its geological potential and not to its scientific, technological and management capacities. We consider it fundamental to rethink the role of the Mexican Petroleum Institute (IMP) as a key factor for a public policy that defines clear goals and specific objectives for research, development and technological innovation in the sector.
In the financial front, we propose to increase from 0.65% of income to 1% of the value of oil production, the amount destined for scientific research, technological development and training of human resources; assigning said increase to finance the work of the IMP. Also, we suggest that the Federal Executive assume, at least for one year, the cost of operation of the IMP to prevent it from continuing to lose human capital, while its finances are strengthened through greater interaction with Pemex and thanks to the proposed fiscal change.
These proposals will only be viable if they become part of a broad, profound and redistributive Fiscal Reform, which provides the Mexican State with the necessary resources to promote the sustainable and equitable development of the country.