Odebrecht-backed Energy Deal Likely Cost Mexico US$683 Million, President Says

RIO DE JANEIRO, BRAZIL – Mexico’s president said on Saturday that an “abusive” ethane supply deal he has pushed to cancel between a consortium backed by Brazilian firm Odebrecht and Mexican state oil firm Pemex had likely cost taxpayers around 15 billion pesos (US$683 million, R$3.8 billion).

The contract between Petroleos Mexicanos (Pemex) and the consortium made up of Odebrecht-controlled Braskem and Mexico’s Grupo Idesa, was agreed a decade ago during the tenure of ex-President Felipe Calderon, who was in office from 2006 to 2012.

In a video address on YouTube, President Andres Manuel Lopez Obrador said his estimate was based on what he described as probable unfair subsidies and fines paid out over a failure to meet the terms of the deal he described as “abusive”.

“We’re talking about damages to the nation worth around 15 billion pesos,” said the president, who earlier this week declared the contract should be canceled.

Still, he suggested that about 2.1 billion pesos in penalties that he apparently included in his overall calculation had never been lost to Mexico because his administration ceased to pay the fines after he took office at the end of 2018.

Braskem Idesa did not immediately reply to a request for comment. Earlier this week the consortium rejected any wrongdoing and said it won the supply contract fairly.

Under the terms of the contract, Pemex has had to deliver ethane below current market prices.

Braskem Idesa said the price formula had no preference or advantage and was typical of long-term raw material contracts and consistent with prices Pemex charged in the 16 years prior to the deal.

Source: Reuters