December 21, 2018 / 7:47 PM / 2 months ago

CORRECTION-Mexico's Pemex to pay more taxes despite pledge to boost company

(Corrects fourth paragraph to 2018 from last year)

By David Alire Garcia

MEXICO CITY, Dec 21 (Reuters) - Mexico’s new leftist president has pledged to revive the fortunes of state oil company Pemex with a bigger budget next year - while proposing the oil giant pay even more in taxes.

The former monopoly oil producer, officially known as Petroleos Mexicanos, is due to contribute more revenue to the federal government than lawmakers are scheduled to grant the company for its spending.

“The Pemex tax burden is punitive, it’s extremely high and it doesn’t allow Pemex to reinvest,” said John Padilla, a Bogota-based consultant with IPD Latin America.

President Andres Manuel Lopez Obrador, who won office in July vowing to rescue Pemex from years of decline, has proposed increasing the firm’s discretionary budget by 14 percent from 2018 to some $23.4 billion (464.6 billion pesos).

But the same budget proposal estimates total tax revenue from Pemex at about $26.4 billion (524.3 billion pesos), up about 11 percent.

The finance ministry did not reply to requests for comment.

Characterizing Pemex as a “piggy bank” for successive governments, Padilla said it was more heavily taxed than state-run peers including Brazil’s Petrobras and Colombia’s Ecopetrol.

Pemex’s $106 billion in financial debt - the most of any national oil company in Latin America - could prove especially difficult to manage over the coming months if it were to lose its investment grade rating, he said.

The budget blueprint also anticipates collecting nearly $4 billion (79 billion pesos) in additional gasoline taxes, but it is unclear if any of that revenue might be given to Pemex.

The company, which receives funds to pay back the money it borrows, must pay back almost a third of its debt in the next three years.

The spending plans must still be approved by Congress, but most analysts see that as a formality because Lopez Obrador’s MORENA party and allies have a comfortable majority.

Lopez Obrador firmly opposed a 2013 constitutional overhaul championed by his predecessor that ended Pemex’s decades-long monopoly.

The finance ministry is not proposing changes to the law that sets its tax regime, and the higher tax burden in 2019 is largely due to crude oil price assumptions.

Next year’s budget assumes an average $55 per barrel price for Pemex’s oil exports, compared to $46 per barrel in 2018.

Lopez Obrador also wants to end crude exports in three years so he can refine more at home.

$1 = 19.8770 Mexican pesos Additional reporting by Adrianna Barrera; Editing by Tom Brown

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