State Oil Giant Pemex Gets Tax Reprieve as It Strains Under $100 Billion Debt

(Bloomberg) -- Mexico granted Petroleos Mexicanos a deferral of its monthly tax payment, a setback as the government tries to put the state-owned oil company on firmer financial footing.

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Pemex, which has struggled to reduce its roughly $100 billion in debt, will be allowed to put off its so-called DUC levies, according to a decree published Tuesday evening. The decision defers to July 31 a May payment that was coming due this month.

The tax deferral is the latest aid for Pemex provided by President Andres Manuel Lopez Obrador, who has made the revival of the company one of the central platforms of his government, which ends this year. The government didn’t require Pemex to pay the DUC taxes from October to January, and had cut Pemex’s profit-sharing duties to 30% for 2024.

This time, the government is taking a tougher stance by deferring the payment rather than simply canceling it. Investors in Pemex debt have pointed to the government’s flexibility as a signal that Mexico won’t let its oil company default.

The decree didn’t specify the amount due in May, but previous monthly payments made for February and March averaged 15.5 billion pesos ($851 million), according to the central bank.

President-elect Claudia Sheinbaum, who takes office Oct. 1, has said she’ll continue Lopez Obrador’s policy of state support for Pemex.

--With assistance from Scott Squires and Jose Orozco.

(Updates with total debt figure, other background starting in second paragraph)

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