Mexican oil giant Pemex says it will implement a new system for registering contractors, amid concerns about abuse in the state-owned oil company's vast contracting budget.
Pemex's new centralized system for registering contractors will include more than 9,500 service providers and will be linked to other government agencies so that officials can ensure that contractors are up to date on tax payments and other obligations. A system will be put in place to evaluate the performance of each contractor as well, Pemex said.
The plan was outlined Monday, three days after Reuters reported that Mexican authorities had disregarded warnings by government auditors of possible irregularities in Pemex contracts.
The news agency reported that Mexico's Federal Audit Office flagged $11.7 billion of Pemex contracts as having serious problems, ranging from shoddy work to outright fraud, between 2003 and 2012. The report found that between 2008 and 2012, Pemex's internal control unit acted upon just three of 268 recommendations by the Federal Audit Office that the oil company take serious measures against alleged abuse, either by pressing criminal charges, disciplining employees or clawing back money.
The announcement of the new registration system had been in the works before the Reuters report appeared and was not a reaction to the story, a Pemex spokesman said. The system, designed to provide Pemex with more details about the commercial and financial background of contractors, has been in the works for months, spokesman Ignacio Duran said.
Pemex's head of procurement, Arturo Henriquez, told Reuters in an October interview that improving the registration system would cut the scope for abuse by contractors.
George Baker, a Houston-based oil analyst and publisher of industry newsletter Mexico Energy Intelligence, said Pemex's centralized procurement system is unlikely to solve the company's contracting problems. "Pemex isn't changing course, they are just saying we need a better database," Baker said in a phone interview.
In a separate letter to Reuters responding to Friday's report, Pemex said that it has either resolved or is still investigating the remaining 265 serious recommendations by the Federal Audit Office. "In not one instance has there been any covering up or evasion of responsibilities," wrote Duran.
(By Elinor Comlay; Additional reporting by Mica Rosenberg. Edited by Simon Gardner and Michael Williams)