Mexico has granted Petroleos Mexicanos a temporary tax reprieve, deferring the state-owned oil company's May tax payment. This move comes as Pemex, burdened with around $100 billion in debt, continues to struggle financially. The deferral aligns with President Andres Manuel Lopez Obrador's commitment to bolstering Pemex, but it also reflects the government's ongoing support for the company amidst its fiscal challenges.

Mexico's state-owned oil company, Petroleos Mexicanos (Pemex), has been granted a temporary tax reprieve by the Mexican government, allowing it to defer a significant portion of its May tax payment [1]. This move comes at a crucial time for Pemex, which has been grappling with a financial debt burden of nearly $108 billion at the end of 2022 [1].

The tax deferral, valued at approximately $2 billion, aligns with President Andres Manuel Lopez Obrador's commitment to supporting Pemex amidst its ongoing financial challenges [1]. This commitment is reflected in his efforts to revive the once-powerful symbol of Mexican self-reliance, which was created in 1938 [1].

Mexican Deputy Finance Minister Gabriel Yorio explained that Pemex would not immediately pay the profit sharing rate (DUC) or royalty, providing the company with an estimated $2 billion in cash flow [1]. This financial boost is crucial, as Pemex has already paid off around $6 billion in debt for 2023 and has another $2.5 billion left to pay [1].

The tax reprieve is not the only measure being taken to support Pemex. Mexico is also in the process of purchasing 13 power plants from Spanish energy company Iberdrola for $6 billion [1]. A financial vehicle, involving public investors including the state infrastructure fund Fonadin, will be created within a year to facilitate the purchase [1].

Despite concerns over the fair market value of the power plants due to their mix of older and newer facilities [1], Mexican officials are confident in the purchase's viability. Deputy Finance Minister Yorio stated that the agreed-upon cost was at the lower end of a range of prices identified using various methodologies, and future cash flows generated by the energy assets would help pay back investors [1].

In conclusion, Mexico's decision to grant Pemex a temporary tax reprieve is a significant step towards providing the state-owned oil company with the financial breathing room it needs to continue its operations amidst its considerable debt burden. This move aligns with President Lopez Obrador's commitment to supporting Pemex and is part of a larger effort to bolster the company's financial position.

References:
[1] Reuters. Mexican Deputy Finance Minister Gabriel Yorio is seen during an interview with Reuters at the National Palace in Mexico City, Mexico September 9, 2020. (April 13, 2023). https://www.reuters.com/business/energy/mexico-help-pemex-with-2-bln-tax-deferral-deputy-finmin-2023-04-14/

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