May 28, 2021
1. Pemex buys Deer Park with a high impact on consumers
President López Obrador announced Pemex’s acquisition of the Deer Park refinery in Houston, Texas, which was owned by the oil company Shell. Pemex has been an active partner in the refinery for almost 30 years; the administration’s goal is to collaborate closely with the installation. The planning is based on increasing fuel production, under this scheme six refineries of the National Refining System (SNR) are being rehabilitated, including the new ‘Dos Bocas’ refinery.
The Deer Park refinery has a crude processing capacity of 340,000 barrels per day; it produces more than 110,000 barrels per day of gas, 90 barrels per day of diesel and 25 barrels per day of jet fuel, among other products. However, the rating agency Moody’s estimates that Deer Park’s full recovery in earnings and its leverage profile would last beyond 2021. Thus, the plant will face a weaker credit profile thereafter.
El Economista: Tenemos nueva refinería, anuncia AMLO tras compra del 50% de Deer Park de Houston por parte de Pemex.
Forbes: Refinería Deer Park será un problema de largo plazo para consumidores en México.
El Economista: Moody’s baja la calificación crediticia de la refinería Deer Park.
2. Polls highlight support for the president’s party days before elections
Ten days away from a critical election in Mexico’s history, El País reported the average polling figures in the most important states. López Obrador’s party maintains dominance in four of the six key governorships, the states that stand out the most are Guerrero, Baja California, Sonora, and Sinaloa stand out. In Nuevo León and San Luis Potosí, competition is between opposition parties, who enjoy a broad advantage over the president’s party, according to the latest analysis of the polls.
On the other hand, the Electoral Tribunal of the Federal Judicial Branch (TEPJF) filed a violation of impartiality and neutrality norms against the president after the presentation of his 100-day report of the third year of his government went beyond the allowed time.
3. Mexican economy grows despite the labor market climate
The rating agency Moody’s improved the growth forecasts for the Mexican economy, estimating that in 2021 the gross domestic product (GDP) will increase 5.6%. Despite the outlook, the strength of the country’s recovery will be affected by domestic factors, primarily investment. Growth this year will be driven by strong demand for Mexican exports from the United States.
The secretary of the National Council for the Evaluation of Social Development Policy (Coneval), José Nabor Cruz, reported that working poverty increased in 26 of the 32 states of the country, at the beginning of the COVID-19 pandemic. Coneval noted a 4.8% annual decrease in real labor income and an increase in extreme poverty lines in urban and rural areas. Women were the most affected sector in the labor market.
Milenio: Moody’s mejora perspectiva de crecimiento para México; PIB aumentará 5.6% en 2021.
El Universal: Creció pobreza laboral en México por pandemia de Covid: Coneval y En pobreza laboral 50.1 millones de mexicanos; impacta más a mujeres.
4. The constitutional controversy process against the Telephone Users Registry begins
Adolfo Cuevas, Commissioner President of the Federal Institute of Telecommunications (IFT) filed a constitutional controversy against the creation of the National Register of Mobile Telephone Users (Panaut) because it does not have the resources to comply with the obligations imposed by the legislation, since its resources are assigned to fulfill the functions mandated by the Constitution, therefore, the system contravenes its budgetary autonomy.
The institute added that the registry invades its faculties, because it forces it to implement a regulatory model that conditions access to telecommunications services. In addition, it will require the hiring of 150 officials, which will mean an outlay of MXN $150 million (USD $7.5 million) to its annual budget, which was cut twice by the Deputies Chamber.
5. Mexico to solve airspace qualification problem
The Federal Aviation Administration of the United States (FAA) downgraded Mexico’s airspace to category 2 due to technical issues that Mexican civil aviation authorities must resolve soon. This evaluation prevents the opening of new flights for the time being and restricts the ability of airlines in both countries to sell tickets on shared flights.
The Ministry of Communications and Transportation will invite the representatives of the national commercial airlines to jointly solve the necessary requirements to comply with the organization’s standards. Although the capacity of Mexican airlines with flights to the U.S. increased in 2021 compared to previous years, this new rating may affect expansion plans into U.S. airports.