As the announcement of the Round Zero results and the content of Round One loom nearer, media outlets have begun expanding the reach and the scope of their Secondary Laws analysis to determine the true impact of some of the specific clauses that are included in these recently approved documents. Journalist Alexandra López focused one of her pieces for newspaper Reforma (titled “SHCP Calculates Fiscal Dent”) on the subject of fiscal impact by going over the calculations made by SHCP minister Luis Videgaray:
In 5 years, PEMEX will cease to contribute MX$90 billion to SHCP. Luis Videgaray, SHCP Minister, has said that the creation nine new laws and the modification of 12 preexisting ones will now make PEMEX a productive enterprise of the state rather than a government-owned business. All of this implies that PEMEX will be actually profitable from now on.
“By the end of a transitional period of five years, there will be a historic reduction in the fees paid by PEMEX, almost MX$90 billion annually. Such decrease in PEMEX’s fiscal conditions was granted from the Secondary Laws’ approval by Congress. First, the rate applied to the company’s net earnings will be reduced from 71.5% to 65%,” Videgaray outlined.
In the Secondary Laws of the Energy Reform proclaimed by President Enrique Peña Nieto yesterday, changes to the procedures when releasing information related to Earnings from Hydrocarbons as well as the Mexican Petroleum Fund were also established. These include modifications such as reducing the amount of fees from nine to three while it will have to release the true operational costs. “The fiscal regime of PEMEX will be simplified, where instead of paying nine fees it will only pay three, as well as the corresponding income tax. Through these changes, the fiscal regime that will apply to all contracts with private firms will be the same as PEMEX,” Videgaray added.
In another piece titled “Lozoya satisfied with the assigned fields”, López quotes PEMEX CEO Emilio Lozoya regarding his veiws of the Round Zero results to be announced tomorrow and what he believes they will impact the impact on the NOC:
“The fields that Mexico’s Ministry of Energy (SENER) will assign to PEMEX in Round Zero will surprise the general public,” says Emilio Lozoya, CEO of PEMEX during an interview yesterday after the enactment of the secondary laws of the energy reform. He indicated that PEMEX could build, together with SENER, a portfolio of fields that will allow the company to diversify risk.
“SENER will announce the final results of Round Zero on which it worked hard until the enactment of the constitutional reform, together with PEMEX E&P and different technical areas of PEMEX,” says Lozoya. “Round Zero will strengthen the company and will allow it to continue making its contributions to the Ministry of Finance.
Yesterday, President Enrique Peña Nieto announced that SENER will announce the selection of fields that will be assigned to PEMEX. In the afternoon, PEMEX will then publish a refined version of this list indicating the fields in which it would like to operate with a commercial partner. The partner, in agreement with the rules set out in the Hydrocarbons law, will be tendered through the National Hydrocarbons Commission (CNH). “We are very satisfied with the portfolio that we have been able to create. I believe that this portfolio will positively surprise the public opinion as well as the investment community,” says the PEMEX CEO.
Other industry-related players, such as the Canacintra and the Economy Ministry, also communicated their own assessments regarding the impact of the Energy Reform through statements collected in a piece by Karina Suárez for newspaper Reforma titled “Anticipation for long-term energy benefit grows”:
The Energy Reform will bring benefits to SMEs, but only in the long-term. Rodrigo Alpízar, President of the National Chamber of the Transformation Industry (Canacintra), pointed out that investors must be cautious regarding the timeframe in which national companies will benefit from the Energy Reform. “This year, we will be working with the Ministry of Economy to determine what kind of framework will dictate the degree of national company’s participation in the industry”, said Alpízar.
Additionally, the President of the Canacintra warned that the 25% of national content that is required for energy projects can only be fulfilled through the formation of joint ventures and mergers between SMEs and a competitive amount of financing, such as the one that is granted to companies Spain, Germany, and China; as he is quick to point out, “Mexico needs a line of credit that can compete at that level so that contracts might be maintained.”
During the launch of the Entrepreneur Week 2014, Economy Minister Ildefonso Guajardo guaranteed that the Energy Reform is the last of a series of reforms that will grant higher competitiveness to Mexican SMEs. “Every market will behave according to its own rhythms; we will undoubtedly see effects on all segments, especially those related to the energy sector”, said Guajardo. Regarding this matter, Jazmín Pachecho Mondragón, promoter of the food manufacturing firm Pioneros and professional of this sector with a career spanning 15 years, acknowledged that the high prices of gasoline and electricity have limited their expansion plans to other cities or even to export.
Guajardo, along with President of the National Entrepreneur Institute Enrique Jacob and Google Mexico Director Lino Cattaruzzi, launched Google Mi Negocio, a tool that joins all SME platforms inside the same interface.