Two Contracts, Same Chevy Trucks and a 63% Price Gap for Pemex

  • The state-owned oil company has been told to cut spending
  • `It flies in the face of all the discourse' about costs

These were the deals: One Chevrolet Silverado 1500 pickup would cost the equivalent of $6,687 a year to lease, the other $10,926 -- 63 percent more. For Petroleos Mexicanos, both seemed to make business sense.

How that could be possible probably says less about trucks than about Pemex, a state-owned enterprise seen as a monument to inefficiency. While the two fleet-leasing contracts, worth a combined 4.8 billion pesos ($268 million), might seem like a footnote, their story encapsulates the troubles at Mexico’s largest corporation, which is struggling in the face of collapsed oil prices and the end of its 76-year monopoly.

“It pretty much flies in the face of all the discourse” about cutting costs, said Marcelo Mereles, a former Pemex official who’s a partner at the consulting firm EnergeA. The divergent contracts really stand out, he said, because Pemex has a procurement division that’s supposed to generate savings.

Under the terms posted on its website, Pemex agreed to pay Integra Arrenda SA an average 534 pesos a day per vehicle for 2,252 6-cylinder 2015-model pickups under a lease that expires at the end of 2019. The deal with Jet Van Rental Car SA, which began in March 2014 and runs out this year, costs 328 pesos a day per vehicle for 54 trucks from the 2014 model year, according to a copy of the agreement obtained by Bloomberg. The two contracts contain virtually the same specifications -- except for ABS brakes.

Pemex officials didn’t respond to telephone calls and e-mails.

A lawyer for Integra, Antonio Holguin, said the company’s contract is more costly for several reasons, including expectations the trucks will be put to more rigorous use, though the two documents don’t spell out any differences.

Applying Pressure

Holguin also cited the “matter of foreign exchange,” referring to the decline in the peso against the U.S. dollar in recent years and saying that had made some imported parts more expensive. The peso was at 13.06 per dollar when the Jet Van deal was signed, and at 17.22 when Integra’s was awarded, a 24 percent difference. The trucks have a mix of foreign- and domestic-made parts; the annual inflation rate for vehicles has been running at around 2 percent, according to Mexico’s auto-dealer trade group.

Jet Van officials didn’t respond to telephone calls. The Integra contract hasn’t been put into force; unrelated issues have stalled affiliated agreements that must start running at the same time. 

Senator Marcela Torres, a member of the opposition National Action Party, said a main concern with the two deals is transparency. “Why did the price rise so much from one year to the next? It’d be ideal to have public forums to address questions like these.”

Deputy Finance Minister Miguel Messmacher said in January that Mexico might inject capital into Pemex if it shows it can lower operating costs, among other things. The company, which hasn’t recorded a profit since 2012, has $79 billion in pension liabilities, the largest of any oil and gas company in the world, and debt levels that are set to exceed $100 billion this year. Pemex pledged last week to meet a government request that it trim its 2016 budget.

Mexican President Enrique Pena Nieto -- whose administration ended the Pemex oil monopoly in 2014 -- has applied pressure. In February, when he announced economist Jose Antonio Gonzalez Anaya would be the new chief executive officer, he said the company was under the gun “to review its expense program and to strengthen its investment processes.”

Anaya said on a call with investors Feb. 29 that the company is committed to increasing productivity and promoting rational use of resources. He expects to find savings of about 28.9 billion pesos this year.

The attention being paid to Pemex’s long-running troubles is why even a relatively minor truck-rental contract can spark such interest, said George Baker, an analyst and publisher of Mexico Energy Intelligence. “Historically, Pemex has been characterized by some financial mismanagement.”