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Mexico kicks off $7.7 billion refinery construction amid trade tariffs from the U.S

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Mexico is kicking off the construction of its $7.7 billion (150 billion peso) oil refinery amid a call by President Andres Manuel Lopez Obrador for the country to become self-sufficient in energy production.

The nation “depends too much on buying foreign gasoline,” the president, commonly known as AMLO, said at an event Sunday in Paraiso, Tabasco, where the seventh refinery will be built. The bidding process for the six phases of the refinery begins at the end of June.- READ MORE: worldoil.com. Is the new Oil Refinery good for Mexico but bad for American Business?

This comes as Trump plans to put tariffs on Mexico for, in Trump’s words, Mexico has not done enough to stem the flow of illegal immigration. No word yet if the cancellation of the new refinery project would help stop any tariffs from taking effect on the 10th of June or if they would be part of any new “Trump Deal”.

The Mexican government tried to defuse a major trade conflict with Washington on Friday, The rushed meeting comes amid a chaotic 48 hours, in which Trump defied numerous aides and ordered them to impose tariffs on Mexico.

Veteran leftist Lopez Obrador, who took office in December, predicted that Trump, who is also engaged in a worsening trade war with China, would ease up on his demand.

“I tell all Mexicans to have faith, we will overcome this attitude of the U.S. government, they will make rectifications because the Mexican people don’t deserve to be treated in the way being attempted,” Lopez Obrador told reporters.

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PEMEX

Documents reveal Pemex will get 7.3 billion usd in tax breaks

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Mexico is seeking as much as 138.7 billion pesos ($7.3 billion) worth of tax breaks for Petroleos Mexicanos in 2020 and 2021, according to online reports.

The internal document detailed a tax relief of 138.7 billion pesos ($7.28 billion) over 2020 and 2021, saying the government would propose the changes on Sept. 8 when it presents its proposal for the 2020 budget.

Pemex said the tax reductions would be achieved by lowering the profit-sharing tax to 54% by 2021 from 65%. The tax relief would amount to 47.1 billion pesos in 2020 and 91.6 billion pesos in 2021.

The modification will be made gradually over the next few years, in such a way that it does not generate fiscal imbalances for the government, the text indicates.

Pemex is under the microscope of risk rating agencies due to its financial debt of 106.5 billion dollars and its recurrent negative cash flow, which could lead to the loss of its investment grade.

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Business

American debt-rating agencies go after Mexico’s Pemex

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Mexican President Andres Manuel Lopez Obrador took office in December vowing to revive state-owned energy company Pemex and put the brakes on foreign investment to give the public a bigger cut of the country’s oil wealth. Those are fighting words for American debt-rating agencies, anytime they notice governments consolidating an industry for the benefit of the people they start downgrading. they are the protectors of Wallstreet profiteers.

With $106 billion in financial debt, Pemex would likely see borrowing costs soar as many investors dump its bonds.

Following President Andres Manuel Lopez Obrador win, it was expected that one would hear a ramp up of news about how “notoriously corrupt” the petroleum company owned by the Mexican government is. We have to remember that Past Mexican Presidents didn’t invest in Pemex and would only use it as a piggy bank. take the refineries, for example, Mexico is just now starting to revive and update the outdated refineries belonging to Pemex. and they want to build a modern oil refinery so they won’t depend on American refineries for fuel. but what does Mexico get in return? American debt-rating agencies will punish Mexico’s Pemex for not opening up to foreign investors.

It turns out that American debt-rating agencies are known for pushing  American foreign policy , So much so that China’s finance minister accuses credit rating agencies of bias.

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