Mexican President Andres Manuel Lopez Obrador talks of restoring Pemex to its glory days in the last century, when Mexico was a top oil producer (GUILLERMO ARIAS)

Mexico City (AFP) – Mexican President Andres Manuel Lopez Obrador said Friday he would soon announce a rescue plan for troubled state oil company Pemex, suggesting it would be worth around $1.5 billion.

Pemex is struggling under the weight of more than $100 billion in debt and years of declining production, and was recently downgraded by ratings company Fitch.

Trying to shore up the firm, Lopez Obrador’s government has announced a series of tax breaks for Pemex — and will now announce further measures next week, the leftist leader said.

“The decision has already been made. We are going to strengthen Pemex, to rescue Pemex, to make it solvent,” he told a press conference.

He said the plan would include further reducing the company’s fiscal burden, and did not rule out a cash injection.

As of Thursday, the total amount of rescue money under discussion was “around $1.5 billion,” he added.

In its downgrade note, Fitch estimated Pemex needed an additional $9 billion to $14 billion annually to get back on its feet.

“Because of bad management by previous governments, which took away all its revenues with high taxes, Pemex was left in the situation it’s in,” said Lopez Obrador, who took office in December after running an anti-establishment campaign.

Lopez Obrador had previously announced an increase of $3.7 billion in Pemex’s budget. The recently announced tax breaks are meanwhile estimated to be worth around $3.5 billion by 2024.

Fitch, however, said that did not go far enough.

Lopez Obrador, a leftist and energy nationalist, talks of restoring Pemex to its glory days in the last century, when Mexico was a top oil producer.

The company’s production has plummeted for years, from a peak of 3.4 million barrels per day in 2004 to half that in December 2018.

Lopez Obrador has vowed to increase Pemex’s production to 2.4 million barrels a day by the end of his term, in 2024.

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