Monday, May 13, 2019

"Limited Know-How" Will Cost Mexico Plenty -- Reuters -- Is This Guy Nuts Or What? -- May 13, 2019


May 14, 2019: Pemex secures $8 billion loan to avoid junk status. The loan was mentioned in the story below, but the reason not given, until now.

Original Post 

Is this guy nuts or what? He's starting to make Occasional-Cortex look like a "financial Einstein."

If I understand this correctly, the new Mexican president doesn't want "private sector" help on the country's new $8 billion refinery. He wants the state oil company, Pemex, to do it without private sector expertise.

Going it alone -- without expertise -- will increase the cost of the new refinery by $2 billion to $4 billion. This according to Reuters.
Petroleos Mexicanos, or Pemex, is already the most indebted oil company in the world, and has been hemorrhaging cash for years—even in the days of $100 oil.
Earlier today, Mexico Daily News reported that three banks were extending an $8 billion loan to Pemex to add to its heavy debt burden, which is already more than $100 billion, from oilprice.
Remember, this is the same guy that shut down construction of a badly needed new airport for Mexico City due to high costs.  But did anyone catch this?

From aljazeera:
Mexican President Andres Manuel Lopez Obrador has announced the construction of a controversial new airport in Mexico City.

But the president is facing heavy criticism over the plans, after cancelling a multibillion-dollar airport project that was almost halfway complete.
From another source:
Mexican President Andrés Manuel López Obrador on Monday symbolically launched work on a new airport for Mexico City to replace the nearly half-built $13 billion project he cancelled upon taking office.
López Obrador promised the new Felipe Ángeles airport northeast of the capital won't exceed its budget and will save the government money even with the cancellation of the partially built airport.
The new airport — named for a general allied with revolutionary icon Pancho Villa — is at the Santa Lucia military air base and the army is in charge of getting it built for $4.1 billion.
It is supposed to begin operating in mid-2021, though construction has not yet begun.
Two new runways would be added to its existing one and the commercial airport would share the space with the military.
Critics have argued that the new airport will have difficulty operating simultaneously with the existing airport, but in a report by the military, consultant Navblue said they could operate simultaneously in terms of air space.
Mexico's foreign exchange reserves are in incredibly good shape, so no worries. 

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