April 8, 2019 / 4:59 PM / a year ago

UPDATE 1-Mexican president proposes local leader of his party for Pemex board

(Recasts with political affiliation of nominee, details on second nominee and board background)

MEXICO CITY, April 8 (Reuters) - Mexican President Andres Manuel Lopez Obrador plans to nominate a local leader of his leftist political party to fill an independent seat on the board of state-run oil company Pemex, the president said on Monday.

Lopez Obrador told reporters at his regular morning news conference that among the three nominees he is sending to the Senate is Jose Eduardo Beltran, who leads the president’s MORENA party in his home state of Tabasco.

Beltran, who did not immediately respond to a request for comment, is a petroleum engineer and former member of Congress who served a three-year term in the 1980s, according to his official Facebook page.

The nomination could run into legal trouble as the main law that governs Pemex states that political party leaders are prohibited from serving as board members for the company.

Lopez Obrador said he will also nominate Edmundo Sanchez and Juan Jose Paullada to the 10-member Pemex board, in which half the seats are held by independent members and the other five by senior government officials.

Lopez Obrador previously nominated Sanchez to serve on Mexico’s energy regulatory commission, but was rejected by the Senate amid controversy over his qualifications.

There are currently three vacancies among the five independent seats of the board and the Senate has 30 days to consider the nominations.

After the Wall Street Journal reported late last month that three Pemex independent board members were set to resign, the president dismissed the individuals as “conservatives” and suggested that their departure would be a welcome development.

The Pemex board is key to setting policy for the company formally known as Petroleos Mexicanos, as certain authorizations require at least two votes of five independent members of the board.

Lopez Obrador, who won a landslide election last year on promises that included strengthening Pemex, has favored public spending for the highly indebted company such as the recent authorization for a $3.9 billion capital injection from the government that included new tax relief.

The president is also pushing to fast-track a multi-billion dollar oil refinery that critics say is too expensive and unnecessary, and that will also require approval from the Pemex board.

Credit ratings agencies have warned that pledged government support for Pemex is not enough to stabilize Pemex and have put its credit rating at one notch above junk, increasing fears of a downgrade that could raise Mexico’s sovereign borrowing costs. (Reporting by Anthony Esposito, David Alire Garcia and Adriana Barrera; Editing by David Gregorio and Susan Thomas)

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