LA JOLLA, CALIF. - Oil giant Petr¢leos Mexicanos and the Mexican government must develop ``basic definitions of the business'' and resolve ``significant labor issues'' before moving to privatize petrochemical plants, a Pemex leader said May 22. ``I think the biggest difficulties we're facing right now are [developing] some of the basic definitions of the business,'' said Pedro Haas, director general of the operating company Pemex Petrochemicals and Natural Gas.
``Pemex and our shareholders, the government, are dealing with that problem right now, and I think we're learning a lot from talking with interested parties,'' Haas said at the opening session of a three-day Latin American Energy Conference in La Jolla.
``Quite a few people would want Pemex to keep a share, or at least a portion of the equity, in the privatized assets,'' Haas said. ``In some cases, we have to ask ourselves if we want to hold some shares or sell the assets. [There are] some basic issues that have to be resolved. We're almost there.''
Parts, or all, of 61 nonstrategic Pemex-run petrochemical plants and associated feedstock supplies could be privatized, generating an infusion for the cash-strapped monopoly.
Labor questions abound, especially with the privatization-opposing oil union.
``Those [issues] have also got to be resolved,'' Haas said. ``Obviously, a lot of these assets are concentrated in the area of Coatzacoalcos in the south of Veracruz. This is an area where the chemical industry is extremely important, and people are not indifferent to what will happen to their jobs.''
Raw material pricing, a third issue in the privatization process, is seen as less critical.
``I think it is an economic issue that can be resolved by negotiation,'' Haas said.
``At end of day, a lot of these [privatization sale] prices will be reflected in the raw material price,'' he said. ``Either collect upfront if the raw material is lower, or collect over the life of the asset in the contract if the raw material is a higher price.''
As to when the ground rules for privatization might be completed, Haas said, ``A very significant effort [is] being put in place right now to have it done by the end of this year. Obviously, it is a time schedule, and we might slip somewhat.''
He did not specify a schedule for any bidding process, once thought possible by the first quarter of 1996.
Pemex Petrochemicals and Natural Gas is among several operating companies within the giant Mexican organization.
The conference was sponsored by the La Jolla-based Institute of the Americas, the U.S. Commerce Department and two dozen companies.