Privatization of the secondary petrochemical business of Mexico's state oil giant Petroleos Mexicanos (Pemex) came a stage closer last week when the sale got a formal green light from Pemex's top management. Despite solid opposition from labor representatives on Pemex's Council of Administration to the federal government's plan to sell off 61 nonstrategic plants, the state firm's governing body, chaired by Energy Minister Ignacio Pichardo, firmly approved the policy.
The move opens the way to bidding for the state of the first of four major petrochemical complexes, three of which - La Cangrejera, Morelos and Pajaritos, all on the Gulf of Mexico coast in Veracruz state - are targets for private sector plastics industry suppliers.
First, the government is expected to lay down the rules of sale and open bidding for the smaller fourth complex - Co-soleacaque, also on the Gulf Coast - reputed to be Latin America's biggest producer of ammonia.
Terms of the sale were scheduled to be revealed Oct. 31. But last week, Energy Minister Pichardo announced a delay in the program. Details of the procedure are now due to be made known by Nov. 15, according to a Pemex spokeswoman.
Bidding is likely to be opened in December on the other three complexes, which include plants producing ethylene, low and high density polyethylene, polypropylene and vinyl chloride.
Meanwhile, a group of Mexican petrochemical companies keen to win a share of the Pemex plants is negotiating to form a consortium to compete with foreign bidders.
Local firms considering joining a consortium include Monterrey, Mexico-based industrial Grupo Alfa SA de CV, Hoechst subsidiary Grupo Celanese SA, Grupo Cydsa, also of Monterrey, Grupo Idesa Petroquimica SA, Grupo Industrial Resistol (Girsa) and industrial group Desc.
The prime mover in efforts to establish a local consortium is Grupo Alfa, which claims to be Pemex's biggest petrochemicals customer. It runs six related subsidiaries, two of them - Polioles SA de CV and Indelpro SA de CV - joint ventures producing PS and PP resins respectively.
Alfa spokesman Enrique Flores agreed that the companies are discussing forming a consortium. But press reports that a group had been formed were exaggerated, he said.
Although the firms talking are all Mexican, talks also are being held with potential foreign bidders, he said.
Flores, who admitted the greatest interest was being shown in the La Cangrejera and Morelos complexes, suggested there could be further government delays in the sale, giving more time for a joint group to be formed.
Grupo Celanese spokesman Alfredo Arvizu said his firm was approached to join a consortium but had not yet fully approved the idea. He confirmed that the company is interested in the privatization but is awaiting sale details.
Grupo Cydsa, whose Policyd SA de CV subsidiary produces PVC resins is interested in bidding as a group and has been considering joining a consortium. Policyd chief executive Enrique Alarc¢n said that the Pajaritos complex with its vinyl chloride plant would be of great interest to his firm.
U.S. management consultant and energy industry expert George Baker of Baker & Associates of Oakland, Calif., said it was more important for Mexican firms to form a consortium. Otherwise, he suggested, they might individually fail to meet the bidding requirements.
He predicted that overall around a dozen serious bidders will be seek the privatized Pemex plants, despite press reports that 70 firms would bid. He added that the government was likely to look more at qualitative issues like a bidder's business plant etc., rather than simply the offer price.