MEXICO CITY - Mexico's state oil monopoly Petroleos Mexicanos will privatize 61 nonstrategic Pemex petrochemical plants, including those supplying resins to the plastics industry, by the first quarter of 1996. But analysts suggest that despite the sale's relatively good timing - there has been an upturn in global petrochemical markets and potential buyers are flush with cash - Pemex may have to offer plants for a price as low as 30 percent below replacement cost.
``Right now a petrochemicals producer would have to price the plants about 30-40 percent below reinvestment levels or replacement cost to make it attractive for somebody to buy rather than build,'' said S.G. Warburg's New York-based chemicals analyst Paul Raman.
Because Pemex is a state-run organization, ``they probably have been run pretty sloppy'' and as a near-monopoly the plants would not have benefited from competition, Raman said.
Another problem likely to deflate the sale price is that much of the U.S. petrochemical industry is already located on the Gulf of Mexico, with easy access to Mexican markets, he said.
Former Mexican President Carlos Salinas de Gortari first announced plans to sell off Pemex's secondary petrochemical operations in October 1992. But the idea was shelved due to the unfavorable cyclical condition of the world industry. The market's recovery early last year has revived the plan.
In addition, Mexico's current economic crisis and its $20 billion loan package from the United States mean there is new urgency for the government to raise new funds from fresh privatization.
The sell-off plan was announced by Pemex Director General Adrian Lajous on March 18. He said that the sale would involve the 61 plants grouped in nine major Pemex petrochemical complexes, but with 86 percent of the capacity concentrated at Coatzacoalcos, Mexico.
One private group which has already expressed some interest is Dow Chemical Co. of Midland, Mich. Raman said Dow expects to net $5 billion from its sale of Marion Merrill Dow, and has made it abundantly clear that it wants to go into Mexico.
``It would only be worthwhile if the Mexican government priced it at about replacement cost. The other option that Dow has is that it could just build the plants on the Gulf coast and then export,'' he said.
Other potential bidders include BASF AG, based in Ludwigshafen, Germany, which already produces plastic resins in Mexico, as well as some Mexican players.