IMF Urges Mexico to Curb Refining Plans, Warns of Policy Uncertainty Weighing on Investment (Opinion)

BY CHRISTOPHER LENTON

In the midst of a global pandemic and a once-in-a century recession, Mexico needs to do a better job of allocating spending and stimulating investment to help with the economic recovery, according to a new report by the International Monetary Fund (IMF).

Regarding energy, the IMF team was critical of state oil company Petróleos Mexicanos (Pemex) and its use of limited capital.

“Pemex’s business strategy is crowding out resources for essential spending,” the analysts said. “Given its widening losses, it is advisable to focus production only in profitable fields, sell noncore assets, curb plans to increase refining output at a loss, and postpone new refinery plans until it is profitable to do so.”

The latter is a reference to the Dos Bocas refinery, which was a central part of President Andrés Manuel López Obrador’s campaign promise in 2018. Set for his home state, he has called it a key source of jobs and a way to achieve energy sovereignty through decreased dependence on fuel imports.

The refinery is scheduled to be completed in 2024 at a total cost of $8 billion. Construction has faced setbacks, and critics suggest it will not stay on schedule or budget.

Still, the administration remains highly invested in the refining and petrochemicals segment.

Of the five energy sector projects announced as part of the government’s infrastructure plan earlier this week, four were in the downstream segment.

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