Mexico mulling new plan to capitalize petrochemical plants


MEXICO CITY�Mexico's Energy Secretariat is concocting a new scheme to inject much-needed capital into the country's state-run petrochemical plants. Mauricio Toussaint, undersecretary for energy operations, was quoted in local newspapers last week as saying the new plan would be released publicly in coming weeks.

The administration of President Ernesto Zedillo intended to privatize the plants entirely, but was prohibited from selling a majority interest in the plants by an opposition-dominated Congress. A much-criticized scheme to sell off only 49% of the control of the Morelos plant flopped in February 1999 due to lack of interest by foreign companies (OGJ, Mar. 1, 1999, Newsletter). This partial ownership scheme was a second version of the privatization plan, which originally was to have no limit on private investments. Contributing to the lack of interest, however, was Pemex's monopoly on ethane feedstock supply in Mexico.

While Toussaint did not give details on how the new plan would be different, it will still be limited to offering only a 49% stake in any of the plants. The government is expected to offer tax breaks and other incentives in an effort to attract a target investment of $330 million to boost production, particularly of ethylene.

The two plants most attractive to foreign investors are the Morelos and Cangrejera complexes, which are likely to be the first on offer should the new scheme receive approval by other government agencies involved, such as the Finance Secretariat and the Comptroller. Toussaint added that, if this effort fails, any new investment would have to wait until after the new government takes office in late 2000.

Unnamed sources in the Energy Secretariat told local newspapers that Dow Chemical Co., Nova Chemicals Corp., and Repsol-YPF SA, as well as the Mexican companies Alpek and Idesa, are considering participating.

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