MEXICO CITY - The Mexican government has called off the outright sale of 61 secondary petrochemical plants and, instead, has offered a formula for partial privatization. However, the net result appears to be confusion, especially for potential investors. Carlos Gonzalez, technical manager of the plastics trade group, Instituto Mexicano del Plastico Industrias, had a typical reaction when he said, ``Probably, [potential] investors will be disappointed.''
According to an Oct. 13 announcement by Jesus Reyes Heroles, the government's energy secretary, Mexico will sell a maximum of 49 percent equity in secondary plants to private investors, but give them 100 percent control over the plants' operation.
Gonzalez said he does not think this formula will satisfy companies interested in making an investment.
``I think they want to buy the whole plant,'' he said.
``I don't think all of them will leave,'' he said. At the same time, he suggested that the government might do another about-face. ``I'm not sure this is the final resolution.''
Privatization of petrochemicals and other state-owned industries - including television channels, the telephone company, and banks - was initiated during the earlier administration of President Carlos Salinas de Gotari. After the new government of Ernesto Zedillo took over in late 1994, it agreed to the original Salinas plan, but has faced enormous pressure from its own Institutional Revolutionary Party, unions, and opposition party leaders who contend that sale of the plants is like selling the national flag.
An executive of an international petrochemical company with operations in Mexico said he believes all companies interested in buying petrochemical plants ``will rethink and redirect their strategies somehow. Some will go away; some will remain with different strategies.''
He said the 49 percent private ownership coupled with 100 percent control might be ``a very good deal'' for investors.
``You don't have to invest capital, but still have full control. That's a wonderful deal for companies. But a bad deal for the government. It's amazing what's going on.''
The same executive, who requested anonymity, said the whole issue has become so confused, it is difficult to know exactly what is for sale and what is not.
``Polyethylene is not a basic or even secondary petrochemical. It's probably a tertiary petrochemical. They might decide to sell it off'' without any strings attached. Thus, the plastics parts of the petrochemical industry might become wholly privatized, according to the executive. ``But we don't know. The government needs to clarify things.''