Mexico Denies Rumored Plan to Auction Its Energy Firms : Economy: Speculation that Pemex and CFE might be privatized comes amid peso devaluation crisis.

Attempting to squelch rumors that Mexico plans to sell the national oil and electric companies, the Energy Ministry Sunday strongly denied that either Petroleos Mexicanos, known as Pemex, or the Federal Electricity Commission are going on the auction block.

“Pemex and the CFE (the electric utility) are the property of the nation and are not for sale,” according to a four-page statement, which marked the government’s strongest and most detailed denial yet of speculation that the energy companies will be sold to private investors.

The currency crisis that has cut the peso’s value roughly 40% since Dec. 20 has provoked calls from abroad for Mexico to sell Pemex, the oil monopoly that generates a substantial portion of this nation’s exports and a large part of the government’s income.

That movement appeared to gain momentum last week when Finance Minister Guillermo Ortiz told investors in New York of plans to raise $6 billion by privatizing electrical power generation along with additional money raised from selling some petrochemical refineries.

“The Finance Minister’s remarks in New York provoked a lot of speculation,” said Virginia Bello, director of public relations for the Energy Ministry. “If we just let it spread, there will be a general perception that Pemex will be privatized.”

Bello’s comments came as Mexican officials continued their efforts to stabilize the economy and banking system after the devaluation. Mexico’s central bank announced Sunday that it will become the lender of last resort for any bank in need of funds in order to meet capital requirements as a result of the devaluation.

The Energy Ministry’s statement emphasized that both the petrochemical refinery sales and plans for private electricity generation were well under way before the current crisis began. Those programs call for reinvesting the money from sales back into the companies, the statement noted.

The statement also noted there is no intention to propose the constitutional amendments that would be needed to privatize oil, natural gas or other energy industries. The government will also continue to own the electrical distribution networks, which CFE operates.

“The federal government has consistently and unequivocally reiterated its commitment to the constitutional provisions that put hydrocarbons under the state’s direct control,” according to the statement. “The president has said emphatically that Petroleos Mexicanos will not be privatized.”

The Mexican government’s ownership of energy companies is one of the last holdouts in a privatization drive that has swept Latin America as part of free-market economic reforms. Venezuela and Argentina have both allowed private investment in their countries’ oil exploration and refining.

Mexico itself has sold off or closed a thousand government-owned companies in the past decade. But energy, especially oil, is an important symbol of nationalism and sovereignty in Mexico.

When U.S. and British oil companies operating in Mexico were nationalized in 1938, Mexicans of all ages and economic classes lined up outside the Palace of Fine Arts to contribute coins and jewelry to indemnify the international corporations. Since then, energy has been strictly controlled by the government as a strategic industry.

In October, 1992, during the previous administration, the government decided that petrochemicals produced from other petrochemicals--rather than directly from oil or natural gas--are not strategic. Therefore, the government-owned refineries that produce those petrochemicals could be sold to private investors.

Besides generating revenue that Pemex could invest in exploration, production and refining, the sales are seen as a way to make chemical companies in Mexico more efficient by allowing them to control more of the production processes for their goods.

In addition, sales would free the government of responsibility for the huge investments to keep petrochemical refineries up to date with the latest technology.

The effort to sell the plants was thwarted by a cyclical downturn in the petrochemical industry that made the refineries unattractive, oil analysts have said. Prices have been rising since mid-1994, which should permit the successful sale of the plants, according to the statement.

Programs to allow co-generation and private electricity generation for their own use have also been in progress for about two years. The government plans to add alternatives, including construction of new, privately owned plants, sales of plants that need additional investment and programs to use stock market investment to finance plants that will remain under CFE control.