Mexico seeks voluntary pay cuts of 25% at Pemex: letter

Commodities & Futures
© Reuters. The Pemex logo is seen at its headquarters in Mexico City © Reuters. The Pemex logo is seen at its headquarters in Mexico City

By Adriana Barrera

MEXICO CITY (Reuters) – Mexico’s Petroleos Mexicanos (Pemex) is asking some staff to take pay cuts of 25% until December to help the heavily-indebted state oil firm weather the impact of the coronavirus outbreak and slumping crude prices, according to a letter seen by Reuters on Saturday.

In a brief missive titled “authorization of salary deduction”, dated April 24, Pemex invited employees to sign a letter that would permit the loss-making company to dock 25% of their net monthly wage through to December 2020.

Two company sources said the letter was sent to staff of at least “subgerente” (assistant manager) level and above, but one of the sources said it also reached employees at the lower level of “area coordinator”, and some others below that.

Pemex did not immediately reply to a request for comment.

A former company employee said such proposed cuts could include thousands on the payroll of Pemex, which has roughly 125,000 employees.

The pay cut was voluntary, the letter said. It stated whoever signed committed to “joining and contributing to the austerity program to rescue Mexico’s sovereignty” in accordance with an April 23 decree by President Andres Manuel Lopez Obrador imposing public sector pay cuts.

On Wednesday, Lopez Obrador announced reductions of up to 25% in the salaries of high-level officials, including his own, to help pay for some $ 25.6 billion in additional measures aimed at alleviating the economic impact of the coronavirus.

Pemex, which has more than $ 105 billion in financial debt, last week had its bonds cut to junk status when Moody’s became the second of the main three rating agencies to downgrade the company’s creditworthiness to speculative quality.

That move is likely to spark a fire sale of billions of dollars of Pemex bonds among investors whose mandates say they must hold assets of investment grade.

Lopez Obrador has vowed to revive Pemex, but a collapse in global crude prices has battered the near-term outlook for oil companies and dealt a significant blow to his plans.

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