Limited interest in Pemex' $ 1.2 bn Cadereyta refinery expansion

July 15, 1997 Only one group so far has shown definite interest in Mexico's $ 1.2 billion Cadereyta refinery expansion, but Pemex still plans to go ahead with the construction. A top-level Pemex source told that even if the current financing scheme does not work out, Pemex will have to find another way to contract out the project, which is aimed at boosting fuel supplies to industrial Northern Mexico.
The current financing plan requires the company chosen for the construction contract to finance the three-year expansion, and afterward be paid back by Pemex over ten years. The common Pemex financing scheme has never been applied to such a large project, the source said. It allows Pemex to spread the $ 1.2 billion cost over an extended period. But the financial burden has put some smaller contractors off the project, such as Italy's Snam Progetti. Mexico's Empresas ICA also said recently that it was no longer interested in putting in a bid.
Pemex officials have tried to persuade some of the more than 10companies originally interested in the project not to withdraw. Firms can turn in bids until a delayed deadline of August 28, with a decision expected in October. So far Cadereyta has just one strong contender, comprising Mexican construction firm Bufete Industrial, Mitsubishi, Mitsui and Itochu.
Even if it is the only bidder, the consortium is not guaranteed to win the project as it must also propose doing it at a cost that is profitable for Pemex, the source said, who added that Pemex is aiming at having two or three groups bid for the refinery.