Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, July 18, 2014

July 18, 2014

International Trade

Imports into Puerto Cabello:
  • 1,500 tons of auto and motorcycle parts o from Ningbo Segel Int and Ica Internacional for Distribuidoras Repuestos Cacique y Corporación Automotriz ZGT
  • 947 tons of spaghetti and noodles from Pastificio Selmi for CASA
  • 874 tons of infant milk formula from Nestlé Colombia for the Nestlé subsidiary in Venezuela
  • 825 tons of wheat flour in paper bags from Colombia for CASA
  • 705 tons of trousers, televisions, air conditioners, shorts, flip flops, clothes in general, shorts, socks, sandals and dental products from Panamá
  • 668 tons of beans from Albalinisa for CASA
  • 574 tons of glucose from Caribbean Liquid Sugar, Cartagena for CASA
  • 480 tons of milk powder from La Dominicana for CASA
  • 366 tons of milk from Cooperativa Productores de Leche y Centrolac for CASA
  • Over 300 tons of black beans from Dalian Merry Trading for Internacional Grain de Venezuela
  • 276 tons of beef from Industrial Comercial San Martín y Matadero Nuevo Carnic for CASA
  • 212 tons of drugs from Farmacuba for Fundación Oro Negro
  • 59 tons of toilet paper from Kuehne & Nagel for its subsidiary in Venezuela

19 ships remain at bay in Puerto Cabello
One of them is carrying 27,000 tons of wheat; three are bringing 90,000 tons of sugar, and one has 6,000 tons of rice, all of them for CASA. More in Spanish: (El Nacional; http://www.el-nacional.com/

60% overpricing is found in cattle imported from Brazil
Nutrition Minister General Hebert García Plaza has been given a list - also sent to Executive Vice President Jorge Arreaza - identifying 26 "ghost" companies that bought cattle in Brazil after being given exclusive import rights by the Agriculture Ministry. Cattle was then bought in Brazil at U$D 2,240.56 per ton at the official VEB 6.30/U$D 1 rate, and resold at Venezuelan ports - mainly Puerto Cabello - at a form of auction which allocated the cattle to the highest bidder. More in Spanish: (El Nacional; http://www.el-nacional.com/)

11 tons of Venezuelan beef and fish impounded by Colombia, Presidents to discuss staple contraband
Colombia's fiscal and customs authorities have impounded some 11 tons of fish and beef smuggled from Venezuela in the border state of North Santander. President Nicolás Maduro and Colombian President Juan Manuel Santos are scheduled to meet on August 1st to discuss outgoing contraband. (AVN, http://www.avn.info.ve/contenido/maduro-santos-discuss-smuggling-staple-goods-august-1; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/incautan-en-colombia-once-toneladas-de-carne-y-pes.aspx#ixzz37iyvlH88)


Logistics & Transport

Outgoing flights down by more than 50%, AIR EUROPA to cut flights by 57%
As this year started there were 352 weekly outgoing flights from Venezuela. Six and a half months later that number is down to 148 weekly flights, a 42.03% frequency loss, according to a report by the Venezuelan Airline Association. Spain's Air Europa has been the latest to cut, announcing a 57% flight reduction starting in August. More in Spanish: (El Nacional; http://www.el-nacional.com/)


Oil & Energy

CITGO using new debt to send PDVSA cash
PDVSA intends to use new debt sold by its U.S.-based subsidiary CITGO to transfer U$D 300 million back to Venezuela. According to Standard & Poor's CITGO plans to issue U$D 650 million in new debt for "debt refinancing" and "pay U$D 300 million in dividends to PDVSA". More in Spanish: (El Universal, http://www.eluniversal.com/economia/140717/citgo-se-endeuda-para-otorgar-dividendos-a-pdvsa; El Nacional; http://www.el-nacional.com/)

US should be ready if PETRO CARIBE tightens credit terms, study says
The possibility that Venezuela’s financial support for energy imports in the region could erode quickly makes it imperative for the Obama administration to adopt a wide range of policies to avoid an energy crisis in the Caribbean and Central America, a recent Atlantic Council report said. “It’s almost 10 years since Venezuela announced the PETRO CARIBE program, which sells products at market benchmarks, but provides credit financing,” says David L. Goldwyn, president of Goldwyn Global Strategies LLC and a senior nonresident energy fellow at the Atlantic Council’s Adrienne Arsht Latin America Center. PETRO CARIBE has been an enormous political success and a significant financial drain for Venezuela, he noted. (Oil & Gas Journal, http://www.ogj.com/articles/2014/07/us-should-be-ready-if-petro-caribe-tightens-credit-terms-study-says.html)

Venezuela’s loss of thousands of oil workers has been other countries’ gain
In 2003 Venezuela’s then president, Hugo Chávez, fired more than 18,000 employees, almost half the workforce, of the state-run oil corporation, Petróleos de Venezuela (PDVSA). Their offence was to have taken part in a strike called in protest at the politicization of the company. Their punishment was to be barred from jobs not only in PDVSA itself but also in any company doing business with the oil firm. The axe fell heavily on managers and technicians: around 80% of the staff at INTEVEP, PDVSA’s research arm, are thought to have joined the strike. At the stroke of a pen, Venezuela lost its oil intelligentsia. It was a blow from which PDVSA has never recovered. The firm’s oil production has since stagnated, despite a big run-up in prices. The Center for Energy Orientation, a Venezuelan NGO, says the number of incapacitating injuries due to accidents at PDVSA rose from 1.8 per million man-hours in 2002 to 6.2 in 2012. Venezuela’s loss was others’ gain. Not all of the former PDVSA employees stayed in the oil business; a minority chose to remain in Venezuela. But thousands went abroad—to the United States, Mexico and the Persian Gulf, and to farther-flung places like Malaysia and Kazakhstan. (The Economist, http://www.economist.com/news/americas/21607824-venezuelas-loss-thousands-oil-workers-has-been-other-countries-gain-brain-haemorrhage)


Commodities

Drought imperils 20% of cattle in Venezuela
The Venezuelan Cattle Federation has reported at least 200,000 dead heads of cattle and says 20% of the entire stock is at risk due to lengthy drought. They urged the government to import animal feed. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/agro/efe--sequia-en-venezuela-pone-en-riesgo-el-20--de.aspx#ixzz37d84OiJx)


Economy & Finance

Russia approves new line of credit for Venezuela
Communication and Information Minister Delcy Rodríguez says Russia has approved a new credit line for Venezuela following a meeting between President Nicolás Maduro and his Russian counterpart, Vladimir Putin, during the Sixth BRICS Summit, attended by Bolivia, Argentina, Uruguay, and other countries. (El Universal, http://www.eluniversal.com/economia/140717/russia-approves-new-line-of-credit-for-venezuela)

Maduro to seek financing from BRICS (Brazil, Russia, India, China and South Africa) for development projects. He did not give details as to countries, amounts or projects. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40232&idc=2)

12-month inflation tops 62% in June - report
Venezuelan consumer prices rose 62.1% in the 12 months ending in June, boosting pressure on President Nicolas Maduro to control inflation. That figure would be the highest since the nation revamped its methodology for calculating consumer prices in 2008, accelerating from the 60.9% inflation reported by the Central Bank for May. Consumer prices rose 5.5% in June, slightly below the 5.7% increase the bank reported for May. (Reuters, http://www.reuters.com/article/2014/07/15/venezuela-economy-idUSL2N0PQ0S720140715)


Politics

Maduro claims Venezuela is in "very good financial health", announces "fiscal revolution"
During a Friday speech that was touted as an announcement of new economic policies, President Nicolás Maduro claimed the nation is in "good economic health", said the government has sufficient FOREX to meet all needs, and will strengthen domestic production. He also said a "fiscal revolution" is due, but gave no details saying: "We are listening to expert opinion and will provide details later". Maduro also said the government "will audit every single dollar delivered (to the private sector) this year".  The President of the Foreign Trade Center (CENCOEX) later said the audit would inspect the past 5 years. More in Spanish: (PDVSA, http://www.pdvsa.com/; AVN; http://www.avn.info.ve/contenido/maduro-destaca-cumplimiento-del-plan-nacional-divisas-2014; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/gobierno-llevara-a-debate-publico-proyecto-de-revo.aspx#ixzz37d5ySJiF; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-auditaremos-cada-dolar-entregado-en-2014.aspx#ixzz37d6Xz7aW; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/verificacion-abarcara-5-anos-de-uso-de-divisas-de-.aspx#ixzz37iy8CIxT; El Universal, http://www.eluniversal.com/economia/140716/maduro-anuncia-la-revolucion-fiscal-para-el-segundo-semestre)

Nicolás Maduro’s 31 ministries will be subjected to a month long evaluation of all their procedures and decisions. The first ones to be reviewed will be the economic ministries between July 22 and July 23. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40236&idc=1)

Capriles: Venezuela's issues exacerbated by Maduro's economic policies
Opposition leader Henrique Capriles Radonski has disputed President Maduro's claim that the economy is in "good health" and says the Venezuelan economic scenario worsens each year due to policies undertaken by Maduro's government. In order to generate better jobs and achieve economic growth, Capriles says the government must offer stability to foreign investors; this will diversify the domestic production apparatus. (El Universal, http://www.eluniversal.com/nacional-y-politica/140716/capriles-venezuelas-issues-exacerbated-by-maduros-economic-measures)

Protests rise 278% during the first half of 2014
As many as 6,369 protests, equivalent to 35 a day, were registered nationwide in Venezuela during the first half of 2014, a 278% increase over the same period of 2013, when 1,687 protests were recorded, according to the most recent report presented by the Venezuelan Observatory of Social Conflict (OVCS). (El Universal, http://www.eluniversal.com/nacional-y-politica/140717/protests-jump-278-in-the-first-half-of-2014)

López calls for more protests to lead the government to talks
Opposition leader Leopoldo López, who has been in jail since February 18, has sent a letter saying it is necessary to renew "non violent protests" so that the government "agrees" to a dialogue; and calls for restructuring the Democratic Unity Conference (MUD) opposition alliance. "There is no effective dialogue without pressure from the streets", he wrote. More in Spanish: (Infolatam)


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Tuesday, July 15, 2014

July 15, 2014

International Trade

Imports into Puerto Cabello:
  • 1,400 tons of chicken from Argentina and Uruguay, for CASA
  • 1,120 tons of powdered milk in 50 vans from Argentina
  • 528 tons of pasta or spaghetti from Dominican Republic, for CASA
  • 306 tons of margarine in 15 vans from Brazil.
 25 ships at are at bay at Puerto Cabello, awaiting dock assignment. 12 are carrying bulk cargo, including 98,000 tons of yellow corn, 90,000 tons of sugar, 27,000 tons of wheat and 27,000 tons of rice. More in Spanish:  (Notitarde; http://www.notitarde.com/La-Costa/Veinticinco-buques-esperan-en-la-bahia-portena-2197202/2014/07/15/339085)

Guamache port on Margarita island received 600 tons of food directly upon being incorporation as an international port. Food Minister General Hebert García Plaza, and Air and Water Transport Minister General Luis Graterol said it brings a "savings of 67% in operating costs and rates for merchants, optimizing land routes and easing ferries". More in Spanish: (AVN; http://www.avn.info.ve/contenido/nueva-esparta-recibi%C3%B3-este-s%C3%A1bado-600-toneladas-alimentos-puerto-guamache)

Government now accounts for 42% of all imports
Public sector imports continue to grow as the government expands food imports by more than U$D 3 billion. The National Statistics Institute reports state imports were 42% in Q1 2013, up from 34.3% at the same time last year. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/compras-del-gobierno-concentraron-42--de-las--impo.aspx#ixzz37RFnXnI1)


Logistics & Transport

UNITED, LUFTHANSA and AEROLINEAS ARGENTINAS cut flights to Venezuela
UNITED announced it will discontinue its daily Caracas-Houston flight starting in September.
In this way, UNITED joined other major US airlines that have reduced their services in Venezuela amidst problems to repatriate their revenue owing to exchange controls. UNITED will operate four weekly Caracas-Houston flights as from September 17. German airline LUFTHANSA will reduce service to Venezuela by 40% starting next month amid an ongoing dispute about repatriation of revenue from ticket sales. Carriers, including American Airlines, Delta and United, have in recent weeks reduced flights to Venezuela over complaints they have not been able to obtain hard currency through the OPEC nation's currency control system. Lufthansa will cut flights to 3 per week from 5 per week as of Aug. 3, citing "operational reasons." AEROLINEAS ARGENTINAS as of Aug. 8 will reduce available seats by 17% and AIR EUROPA of Spain will cut flights to Caracas by 57%. Venezuela requires airlines to sell tickets using the local bolivar currency. But carriers say they are not receiving approval from the exchange control board to convert those earnings into dollars. (The Chicago Tribune; http://www.chicagotribune.com/business/sns-rt-us-venezuela-airlines-20140714,0,4785408.story; El Universal; http://www.eluniversal.com/economia/140712/united-cuts-flights-to-venezuela; Bloomberg, http://www.bloomberg.com/news/2014-07-11/united-airlines-joins-peers-cutting-flights-to-venezuela.html; More in Spanish: El Universal, http://www.eluniversal.com/economia/140714/lufthansa-disminuye-frecuencia-de-vuelos)


Oil & Energy

Venezuela oil price falls as world oil prices moderate
Venezuela's weekly oil basket fell for the second week in a row as oil prices around the world continued to moderate even as crises in Ukraine, Iraq, Syria and Israel simmered. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending July 11 was U4D 96.98, down U$D 2.00 from the previous week's U$D 98.98. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2343613&CategoryId=10717)

Chacón says excess electricity consumption can no longer be subsidized
Electric Energy Minister Jesse Chacón says the government can no longer continue subsidizing excess electricity consumption. Electric rates have been frozen for the past 12 years, making Venezuela's Electricity Corporation (CORPOELEC) non viable as its revenue covers only 33% of its payroll, at best. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/energia/chacon--el-estado-no-seguira-subsidiando-el-consum.aspx#ixzz37RG083C0)

Russia's ROSNEFT agrees to buy WEATHERFORD's Russian, Venezuelan assets
Russia's ROSNEFT, the world's biggest listed oil company by output, has agreed to buy drilling and well-servicing assets of oil and gas service company WEATHERFORD International in Russia and Venezuela, the company said on Sunday. ROSNEFT, which is expanding its own oilfield services unit RN-Burenie, added that it will buy a total of eight WEATHERFORD group companies after all needed approvals are granted. The deal is expected to close before the end of the year. (Reuters, http://www.reuters.com/article/2014/07/13/rosneft-weatherford-deal-idUSL6N0PO0BN20140713; El Universal, http://www.eluniversal.com/economia/140714/weatherford-assets-in-venezuela-to-be-transferred-to-rosneft; Bloomberg, http://www.bloomberg.com/news/2014-07-14/rosneft-to-buy-weatherford-drilling-units-in-russia-venezuela.html)

PDVSA Naval owes ESPÍRITO SANTO Bank U$D 173 million, according PDVSA's 2013 financial report, which also shows there is a U$D 43 million trust there for the Simón Bolívar Fund. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40163&idc=2)

60% of PDVSA’s revenues in 2013 were generated by the sale of 40% share of the National Gold Company [Empresa Nacional Aurífera (ENA)] to the Central Bank (BCV) for U$D 21 billion. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40155&idc=4)


Commodities

Massive cattle theft reported in Apure state
Some 5,500 head of Brahman cattle have been stolen from cattle raising Hato El Porvenir ranch since 2011.The stolen herd is worth more than VEB 70 million (U$D 11.1) and investors are concerned over the long time it will take to restore livestock in a state that borders with Colombia. Estimated time is more than six years, if provided the proper maintenance Brahman cattle requires. (El Universal, http://www.eluniversal.com/nacional-y-politica/140712/targeting-productive-lands)


Economy & Finance

Annual inflation now averages 62.1%
Unofficial sources report June inflation was 5.5%, which would bring annual inflation for the past 12 months to 62.1%. Such high inflation has not been reported since the 1994 financial crisis and the 1996 economic adjustment. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Venezuela's inflation is 658% above Latin America's average
Statistics from the IMF and the UN Economic Commission for Latin America and the Caribbean point to Venezuela as an exception within the region as the bolivar has lost 83% of its value over the past six years. More in Spanish: (El Nacional; http://www.el-nacional.com/)

MCDONALD'S adjusting accounting to the SICAD II rate (average VEB 50/1 U$D)
Local holders of the MCDONALD'S franchise say they will adjust their bolivar accounting and results from operations in Venezuela to the SICAD II FOREX rate (average VEB 50/U$D 1) due to lack of access to SICAD I currency this year. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140715/mcdonalds-ajustara-sus-cuentas-en-el-pais-a-la-tasa-del-sicad-ii; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/mc-donalds-hara-sus-calculos-contables-a-tasa-sica.aspx)

Business sees negative outlook for the second semester
Business expectations in Venezuela have lowered. As the first half ended with negative figures, the outlook for the second half remains bleak. According to a flash poll conducted by the Venezuelan Confederation of Industries (CONINDUSTRIA), 64% of industrialists expect their activity in the second half will remain unchanged, and 21% estimate it will shrink. The outlook is discouraging, as 61% of respondents said productive activities tumbled in the first half. (El Universal, http://www.eluniversal.com/economia/140714/entrepreneurs-see-negative-outlook-for-the-second-half)

FITCH Affirms BANESCO USA's IDRs at 'B+/B'
Fitch Ratings has affirmed the Long-and Short-term IDRs of Banesco USA (BNSC) at 'B+/B', respectively. The Rating Outlook is Stable. KEY RATING DRIVERS - IDRs, VR BNSC's IDRs are currently constrained by low levels of profitability, its geographic and product concentration to the South Florida CRE market, and exposure to non-domestic credit markets. (Reuters, http://www.reuters.com/article/2014/07/14/fitch-affirms-banesco-usas-idrs-at-b-b-idUSFit70896020140714)


Politics

Istúriz says: "If exchange controls are removed we'll be overthrown"
Hard line Anzoátegui state governor Aristobulo Istúriz says "exchange controls are not an economic policy, in Venezuela exchange controls are a political policy. If we remove exchange controls dollars will be taken out and we will be overthrown. As long as we rule we will have exchange controls." More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/isturiz---si-quitamos-el-control-de-cambio-nos-tum.aspx#ixzz37XC766qH)

Military leader says armed forces do not seek to usurp political areas
Venezuela's main military leader, General Vladimir Padrino says that members of the armed forces have no intention of usurping political areas or becoming political militant. Padrino was responding to criticism for having hailed Hugo Chavez and Nicolás Maduro at a recent military parade. At the same time, he said the provision within the 1961 Constitution barring political activity by the military was "one of its aberrations" and that "all human beings are political animals by excellence". He finally called for "unity among revolutionary forces". Opposition leader Henrique Capriles quickly responded that Padrino is seeking appointment as Minister of Defense. More in Spanish: (Infolatam)

Monsignor Zárate: Dialogue is not meant to leave things unchanged
Secretary General of the Venezuelan Bishops' Conference (CEV), Monsignor Jesús Zárate, asserted that "(government-opposition) dialogue should not aim at cooling things off, leaving things unchanged, in order to bring about serenity and calm which do not lead to real settlement of conflicts or difficulties facing the country."
He stressed the need for both the opposition and the Venezuelan government to show signs of being truly committed to seeking solutions through dialogue.
(El Universal, http://www.eluniversal.com/nacional-y-politica/140714/monsignor-zarate-dialogue-is-not-meant-to-leave-things-unchanged)

Near 1.7 million young Venezuelans neither study nor work
The social and economic reality of young Venezuelans is far away from the government speech. Only 42% out of 7.6 million Venezuelans aged 15-29 years regularly attend a learning center. Another piece of data: 900,000 adolescents aged 15-19 years are out of schooling, that is, they did not finish high school.
This is just one of many indicators arisen from the National Youth Survey 2013 of the Economic and Social Research Institute, Andrés Bello Catholic University (IIES-UCAB) recently released by the project coordinator, Anitza Freitez.
(El Universal, http://www.eluniversal.com/nacional-y-politica/140712/near-17-million-young-venezuelans-neither-study-nor-work)


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Friday, July 11, 2014

July 11, 2014

International Trade

Imports arrived at Puerto Cabello
  • 25,999 tons of yellow corn from Louisiana, for PROAGRO C.A.
  • 24,999 tons of soybean meal from Louisiana, for Agrolucha C.A., Grupo Souto, Granja Alconca and Avícola La Guásima
  • 23,530 tons of wheat from Canadá for Molinos Nacionales C.A. (MONACA)
  • 16,217 tons of assorted foodstuffs, including margarine, beef, chicken, powdered milk powder and cream for CASA.
  • Over 12,000 tons of food in 380 containers from Brazil for CASA
  • 9,000 ton of degummed crude soybean oil from Argentina for CARGILL de Venezuela and PROVENCESA C.A.
  • 4,100 of heads of cattle from Brazil
  • 2,272 tons of whole milk and margarine from Brazil for CASA.

Two opposition legislators denounce major corruption in rice imports from Argentina
Two COPEI party opposition legislators, Abelardo Díaz and Homero Ruiz, have asked the Prosecutor General to start a criminal investigation of former Food Minister General Félix Osorio who negotiated a food cooperation agreement between Argentina and Venezuela. Díaz says "a major fraud has been committed against our nation for over U$D 15.5 billion in up to 30% overcharges on imports of more than 37,000 tons of paddy rice, and an estimated 80% overcharges on 41,000 tons of rice imported from Argentina”. He says these commodities were exported by a company named BIOARTS, which is reported to have a monopoly on paddy rice and corn exports to Venezuela and has "no previous activity in cereals, and much less in exports”. Rice growers in Argentina made the original charge in local media there. More in Spanish: (Notitarde, http://www.notitarde.com/Pais/Diputados-denunciaron-ante-el-MP-megaguiso-en-importacion-de-arroz-2194078/2014/07/10/338273; El Mundo, http://www.elmundo.com.ve/noticias/economia/parlamento/denuncian-presunta-estafa-en-importacion-de-arroz-.aspx; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/empresa-argentina--sin-capacidad--exporto-cereales.aspx#ixzz379dtGNFb; El Nacional; http://www.el-nacional.com/; El Nacional, http://www.el-nacional.com/politica/Involucran-hija-Chavez-estafa_0_442755883.html)


Logistics & Transport

Minister claims Venezuela owes airlines nothing
General Luis Graterol, Minister for Water and Air Transport says international airfares should be set at the exchange rate of the first Ancillary Foreign Currency Administration System (SICAD 1) of VEB 10.8/U$D. "There should be no further distortion" in this area, he says. "The exchange baseline is Sicad and we invite people to learn about the value of their tickets." Graterol reports 21 out of 24 international and domestic airlines operating in Venezuela have delivered their rate brackets to the government. (El Universal, http://www.eluniversal.com/economia/140710/venezuelan-govt-claims-to-owe-nothing-to-airlines; and more in Spanish: Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/18-aerol%C3%ADneas-entregaron-tarifas-boletos-para-c%C3%A1lculo-precios-justos)

AA, Venezuelan government discuss payment schemes
American Airlines Group says it will keep on working with Venezuelan authorities on dates and applicable exchange rate for the repatriation of funds owed by Venezuela for ticket sales. (El Universal, http://www.eluniversal.com/economia/140709/aa-venezuelan-govt-discuss-payment-schemes)

Air France-KLM cuts profit target on overcapacity, cargo, fallout from a dispute with Venezuela
Air France-KLM Group (AF), Europe’s largest airline, cut its full-year earnings forecast amid overcapacity on North American and Asian routes, poor demand for freight and the fallout from a dispute with Venezuela. Earnings before interest, tax, depreciation and amortization will be 2.2 billion Euros (U$D 3 billion) to 2.3 billion Euros this year, compared with a previous target of as much as 2.5 billion euros, Air France said in a statement. In 2013 the airline group reported Ebitda of 1.86 billion Euros. (Bloomberg, http://www.bloomberg.com/news/2014-07-08/ir-france-klm-cuts-profit-target-on-overcapacity-cargo.html)

Venezuela's airport 'breathing' tax
The biggest international airport in Venezuela is charging a fee for the right to inhale clean air. At Maiquetia International Airport in Caracas has passengers flying out now have to pay 127 bolivars tax for the air they breathe to cover the cost of a newly-installed system which uses ozone to purify the building's air conditioning system. But with outgoing tickets already expensive and scarce because of Venezuela's economic crisis, many on social media have responded to the tax with both humor and outrage. Radio presenter Daniel Martínez tweeted: "Could you explain to me the ozone thing in Maiquetia? The toilets don't have water, the air-con is broken, there are stray dogs inside the airport, but there's ozone?" (BBC News; http://www.bbc.com/news/blogs-trending-28227198)

Land Transport Minister says construction of third bridge over the Orinoco river is 65% completed
Construction of the third bridge over the Orinoco River, which connects the states of Bolivar and Guarico, located in the south of the country, is 65% completed, according to Land Transport Minister Haiman El Troudi. The cable bridge will span 11 kilometers of elevated structure, with a 90 foot deep excavation in the center of the Orinoco River. As a result the bridge will have a height of 232 meters, which is equivalent to a 92-story building, from the bedrock of foundations to the top of the central towers. The Minister says around U$D 2.8 billion dollars have been invested in this megastructure, which has generated more than 13,500 direct and indirect jobs. (AVN, http://www.avn.info.ve/contenido/construction-third-bridge-over-orinoco-river-65-completed)


Oil & Energy

PDVSA tax obligations calculated using the exchange rate of VEB 6.30/USD
The Central Bank of Venezuela (BCV) has decided the exchange rate of VEB 6.30/U$D  will be used to calculate tax duties on state-run oil holding Petróleos de Venezuela (PDVSA), its partners and service providers. PDVSA will sell oil income at VEB 6.30/U$D, and funds for investment will be offered at the exchange rate of the second Ancillary Foreign Currency Administration System (SICAD 2), of around VEB 50/U$D. (El Universal, http://www.eluniversal.com/economia/140710/pdvsa-tax-obligations-at-the-exchange-rate-of-veb-630usd)

Santa Rosa gas complex in Anzoátegui is operating normally after completing a depressurization process, says PDVSA. The company explained a routine operational procedure to include the controlled burning of gas in the pit was carried out to replace a blocked valve in a pipe. Anaco residents had reported an explosion and fire in the complex. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40139&idc=4)


Economy & Finance

Bloomberg ranks Venezuela as the worst global country risk among emerging nations
Bloomberg has just published a ranking of “Scariest Places on the Business Frontiers” in which Venezuela appears as the riskiest place among 43 emerging nations, after Nigeria, Egypt, Pakistan and Argentina. Bloomberg's global risk indicator is prepared with the Zurich Insurance Company, based on 35 financial, economic and political indicators for each country. More in Spanish: (EnOriente; http://www.enoriente.com/canales/yvn/34808-bloomberg-venezuela-con-el-mayor-riesgo-global-entre-los-pa%C3%ADses-emergentes-(infograf%C3%ADa))

Venezuela's consumer confidence is lowest in Latin America
According to a Nielsen report consumer confidence in Venezuela is now at 76%, the lowest in Latin America.  Market analysts say that although there have been two minimum wage adjustments here so far this year, buying power has not recovered due to 60%+ inflation, expected new devaluations and scarcity. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Confianza-consumidor-venezolano-America-Latina_0_442755895.html)

Reactionaries within the government hold back exchange rate unification, propose dual exchange
A group of extreme leftist reactionaries, led by Executive Vice President (and Chavez son-in law) Jorge Arreaza, is strongly resisting exchange rate unification as announced by Economic Affairs Vice President Rafael Ramírez. They instead propose a dual exchange rate under the control of the National Foreign Trade Center (CENCOEX). Arreaza has the support of Planning Vice President Ricardo Menéndez, CENCOEX President Alejandro Fleming, and Foreign Minister Elías Jaua, who argue that devaluation will bring about great political cost. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Demand for FOREX by far exceeds supply
Every week the government calls for bidders to take part in a US dollar auction sale within the Ancillary Foreign Currency Administration System (SICAD), but demand for FOREX exceeds supply by far. Based on official figures, demand was for U$D 3.9 billion in eight out of 16 auctions, but only U$D 1.4 billion (36%) were actually sold. The National Foreign Trade Center (CENCOEX) –the body convening auctions - says companies that fail to meet all the requirements to take part in the auctions, or those either suspended or failing to pay taxes properly are dismissed. (El Universal, http://www.eluniversal.com/economia/140710/venezuelan-foreign-currency-demand-exceeds-supply-by-far)

Auto parts chamber reports 82% drop in trade
José Cinnirella, Vice President of the Auto Parts Dealers Chamber (CANIDRA) says the sector has shrunk around 82%, which is a downturn similar to that of carmakers in Venezuela. (El Universal, http://www.eluniversal.com/economia/140710/auto-parts-chamber-reports-82-drop-in-the-sector; http://www.eluniversal.com/economia/140710/car-manufacturing-in-venezuela-in-2014-below-2003-level)


Politics

Government calls on the opposition to resume talks
After a meeting of the national Council of State Executive Vice-President Jorge Arreaza reaffirmed President Nicolás Maduro's calls on the different sectors "to settle differences within the framework of the Constitution”. "We thought the opposition would come, but it did not," Arreaza said. "We have pondered the possibility of incorporating not only dissenters from the Unified Democratic Panel (MUD), but all the sectors of the Venezuelan society," he added. (El Universal, http://www.eluniversal.com/nacional-y-politica/140710/venezuelan-govt-calls-on-the-opposition-to-resume-talks)

Former Presidential candidate Capriles says the dialogue with the government will continue frozen until those detained for political reasons are released. Miranda Governor Henrique Capriles reiterated it is the government that has to answer for the country’s problems and not the opposition. He also called on all of the opposition to channel public dissatisfaction "more forcefully", and demanded a new Elections Board to bring about change through "transparent" elections. At the same time, the Andrés Bello Catholic University (UCAB) has demanded that national authorities release all the students detained for protesting and stop the ongoing legal persecution. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40136&idc=1; and more in Spanish: Infolatam)

El Universal buyer betting on political change in Venezuela
A representative of the acquiring parties says the acquisition of Venezuelan newspaper El Universal, which has so far been critical of the Maduro regime, is a bet that a political shift in the country will ease restrictions on media companies and opposition groups. “They are convinced that this is going to happen,” says Jose Luis Basanta when asked if they were expecting political change in the country. (Bloomberg, http://www.bloomberg.com/news/2014-07-10/el-universal-buyer-betting-on-political-change-in-venezuela-1-.html)

Canada dismisses J.V. Rangel's claim is a "pure fabrication"
The Canadian government, through its ambassador to Caracas, Ben Roswell, answered claims by journalist José Vicente Rangel, a former Chavez Vice President, who has hinted that the Canadian diplomatic mission took part in destabilization. "The government of Canada absolutely rebuts the charges (made by Rangel), which are a pure fabrication" says the diplomat. (El Universal, http://www.eluniversal.com/nacional-y-politica/140709/canada-contends-that-venezuelan-former-officers-claim-is-pure-inventio)

MERCOSUR Summit will be held in Caracas on July 29, according to Paraguay’s Foreign Affairs Minister. The summit has been postponed three times and was originally scheduled for December 17, 2013; then postponed for January and later for February. In the end, it had no scheduled date due to the Venezuelan political crisis. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40129&idc=3)

SPECIAL REPORT: Who rules Venezuela?
The death of a charismatic leader such as Hugo Chavez, along with the ascent of a less popular official such as Nicolás Maduro has created a power vacuum in Venezuela, which is currently being covered by a de facto triumvirate (Maduro-Diosdado Cabello y Rafael Ramírez) that has the backing of Cuba's Castro regime. Foreign Minister Elías Jaua himself has admitted that "no one, no Bolivarian or Chavista, can ignore how serious, how complex it is not to have commandant Chavez at the head of the Bolivarian revolution". Political analyst Alfredo Keller says "it is obvious that Nicolás Maduro has not been able to impose a personal regime, such as Chavez had. What we have here is a triumvirate in which each member needs the other. Chavismo has become a bunch of interests in which internal tension prevails in the absence of the leader that held them together".  According to analyst Agustín Blanco Muñoz, “this revolution is dominated by a military cabal coordinated by Diosdado Cabello and connected to Cuba's G2, which places civilians led by Maduro at a disadvantage”. Rafael Ramírez and his group of technocrats were recently strengthened by Maduro, who personally ratified Ramírez - who controls all funds - as Venezuela's new economic czar and denounced a "brutal campaign" aimed at "destroying him". Ramírez is not expected to do away with exchange controls, but rather establish a new single rate within a system of brackets, and is reported to be negotiating the adjustment -including price increases and a reduction in social programs - with the business community. Economic analyst Rubén Marcano says what lies ahead is "the mother of all devaluations". More in Spanish: (Infolatam)


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Tuesday, July 8, 2014

July 08, 2014

International Trade

Imports arrived at Puerto Cabello
  • 6,000 tons of paddy rice from Guyana for CASA.
  • 3,000 tons of beef and frozen chicken in 64 containers from Brazil for CASA
  • 1,449 tons of green lentils in 58 vans from Vancouver, Canada, to CASA, Distribuidora Jaime García and ASOPRANA.
  • 1,400 tons of infant formula from Mococa Productos Alimenticios for General de Alimentos Nisa
  • 959 tons of frozen beef from Goncalves and Tortola for CASA
  • 958 tons of beef and frozen chicken from Rasic Hermanos for CASA
  •  Over 600 tons of infant formulas from México for Nestlé de Venezuela
  • Over 400 tons of prefabricated building components from México for Petroquímica de Venezuela (PEQUIVEN)
  • 326 tons of frozen chicken from Uruguay for CASA
  • 135 tons of cornmeal from Argentina for Dow Venezuela
  • 123 tons of diapers in 12 vans, from Procter & Gamble in Perú.
  • 100 tons of newsprint in 9 containers from the United Kingdom for Engelberg TranspIantes.
  • 156 tons of milk and 313 of skim milk in 12 containers fron Ecuador.Plus 12,000 tons of sugar arrived in the port of La Ceiba, state Trujillo, for central La Pastora in Lara.

Rice imports from Brazil rose more than 300% this year
As domestic rice producers seek official support to meet a drop in production due to the strong drought throughout the nation, their Brazilian counterparts feast on increasing paddy rice exports to Venezuela, which have grown more than 300% in the first five months of this year, according to figures from Brazil's Ministry of Foreign Trade (SECEX). This year more than 87.493 tons of paddy rice was shipped to Venezuela, exceeding by over 330% the 20,000 tons shipped here during the same period in 2013. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/agro/importaciones-de-arroz-desde-brasil-subieron-mas-d.aspx#ixzz36mJZakgf)


Logistics & Transport

Delta slashes Venezuela flights amid currency dispute
Delta Air Lines is the latest carrier to trim its service to Venezuela, which has seen numerous airlines trim or end service altogether amid a currency dispute with international carriers that fly to the country. Delta's cuts will be drastic, with the airline saying it will slash its Venezuela service by 85%. Delta spokeswoman Sarah Lora says the carrier will end its daily Atlanta-Caracas service on Aug. 1 and replace it with a single round-trip flight each weekend. Venezuela requires airlines to sell tickets in local bolivar currency, but carriers say they are not receiving approval from the exchange control board to turn those earnings back into dollars. The dispute has led nearly a dozen airlines including American Airlines to reduce or suspend service. The International Airline Transport Association (IATA) says the industry has the equivalent of U$D 4 billion trapped here. (USA Today, http://www.usatoday.com/story/todayinthesky/2014/07/07/delta-slashes-venezuela-flights-amid-currency-dispute/12309697/; Reuters, http://www.reuters.com/article/2014/07/07/venezuela-airlines-idUSL2N0PI10H20140707; El Universal, http://www.eluniversal.com/economia/140707/delta-airlines-reduces-flight-frequency-to-venezuela; Bloomberg, http://www.bloomberg.com/news/2014-07-07/delta-joins-american-in-cutting-flights-to-venezuela.html; Fox News, http://www.foxnews.com/world/2014/07/07/delta-air-lines-latest-carrier-to-reduce-service-to-venezuela-amid-revenue/)


Oil & Energy

PDVSA has been funded by six government agencies
Financial statements from state-run oil holding Petróleos de Venezuela (PDVSA) show that in 2007-2014, the industry, has managed to create a funding network with government agencies. Despite high oil prices, PDVSA income cannot meet major projects both in its own core areas and the programs entrusted by the Executive Office. (El Universal, http://www.eluniversal.com/economia/140707/pdvsa-gets-funding-through-six-government-agencies)


Commodities

Guayana collapses under SIDOR worker protests, Maduro names general to head regional development
SIDOR union protests have collapsed Ciudad Bolívar as they closed all bridges in the city using company buses, demanding investment in plant infrastructure and the signing of collective bargaining clauses. Two buses were burned during the demonstrations. José Meléndez, Secretary General of SIDOR's main labor union (SUTISS) says buses involved in street blockages "are 100 useless units". The union is demanding action by President Nicolás Maduro on paralyzed collective bargaining negotiations at a time the steel producing complex is facing their worst production results in history. Maduro has so far refused to meet with the union while the collective bargaining contract has been over due for more than 4 years and under discussion for the last two. Workers claim lack of investment is part of a plan to privatize the company into the hands of Chinese investors. SIDOR employs around 14,000 workers and generates another 80,000 indirect jobs. The government's Guayana Corporation has now made a final offer to SUTISS which will be discussed by union members this week. Maduro this week named Major General Justo Noguera, former Commandant of the National Guard, as head of the Guayana Corporation. More in Spanish: (Correo del Caroní, http://www.correodelcaroni.com/index.php/laboral/item/16278-no-quieren-invertir-en-sidor-para-privatizarla; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/justo-noguera-es-el-nuevo-presidente-de-la-cvg.aspx#ixzz36s6FFccZ; and El Universal, http://www.eluniversal.com/economia/140708/arrecian-las-protestas-por-retraso-del-contrato-de-sidor)

GM Venezuela plans 14% payroll cut as production plummets
The company has asked the Labor Ministry to authorize firing around 500 employees, freeze benefits and cut down one shift. Production dropped 88% from 2013 levels. GM plants here are designed to assemble 300 units daily and are down to 30 units daily, and are projecting some 3,800 units this year - which is around an average monthly output. Last week CHRYSLER Venezuela asked permission to dismiss 119 workers. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/negocios/automotriz/general-motors-venezuela-preve-reducir-14--del-per.aspx#ixzz36tR5lsYy)


Economy & Finance

Economic Vice President Rafael Ramírez predicts a single FOREX rate
Venezuela's new economic czar, who is also Mining and Oil Minister and head of PDVSA, says other steps will be taken first, but does not elaborate on details. Ramírez also referred to pending debts, indicating “all that it is fair to pay will be paid out.” However, he emphasizes that all companies are subject to “capital risk.” Experts say establishing a single exchange rate will not in itself be effective unless fiscal discipline is established and PDVSA funding by the Central Bank and other agencies is stopped. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40069&idc=3; More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/ejecutivo-nacional-implementar%C3%A1-nuevo-sistema-cambiario; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/video---ramirez-manejar-tres-tipos-de-cambios-es-m.aspx; El Universal, http://www.eluniversal.com/economia/140707/tomaran-medidas-fiscales-antes-de-la-reforma-cambiaria; El Nacional, http://www.el-nacional.com/economia/Rafael-Ramirez-anuncia-sistema-bandas_0_440956000.html; and more in Spanish: El Nacional, http://www.el-nacional.com/economia/convergencia-cambiaria-requiere-medidas-adicionales_0_439756274.html)

Ramírez claims Venezuela has sufficient resources to meet external debt obligations
Economic Vice President Rafael Ramirez, says Venezuela has sufficient resources necessary to meet its foreign debt obligations: "We already have within our FOREX budget U$D 42.000 billion set aside to pay this amount. There will be no problem with debt obligations," he says. Ramírez adds that the government will put all state funds into a single account of the Central Bank of Venezuela, and says the nation wants to restructure its external obligations in order to extend due dates. (AVN, http://www.avn.info.ve/contenido/venezuela-has-enough-resources-meet-its-external-debt-obligations; El Universal, http://www.eluniversal.com/economia/140707/government-to-adopt-tax-measures-before-forex-reform)

Government approaches world banks
After disparaging international banks as an emblem of capitalism, the Venezuelan government has held a round of meetings with investment banks in an effort to change the country risk perception. The meetings last month in London and Caracas take place against a backdrop of a severe economic crisis that some believe is leading to a shift in the economic policies by leftist President Nicolás Maduro, and involves stiff adjustment measures over the next weeks. There was an immediate impact to efforts by Economic Affairs Vice President Rafael Ramírez, as Venezuela's country risk dropped from 970 to 914 base points. (El Universal, http://www.eluniversal.com/economia/140707/venezuelan-govt-approaches-world-banks; and more in Spanish: El Univesarl, http://www.eluniversal.com/economia/140708/venezuela-busca-apoyo-para-bajar-el-riesgo-pais)

Government owes at least U$D 8 billion to local industry
Eduardo Garmendia, President of the National Industrial Council (CONINDUSTRIA) says authorities have begun to provide FOREX to repay debts abroad, but only around 10-12% of the amount outstanding. He says pending debts are around U$D 8-9 billion and there is no repayment schedule. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/conindustria--gobierno-debe-al-menos--8-000-millon.aspx#ixzz36sB3d04q)


Politics

Key military authorities ratified at their posts
President Nicolás Maduro has announced that Defense Minister Admiral Carmen Meléndez and the head of the Bolivarian Armed Forces Strategic Operating Command, General Vladimir Padrino López, will remain at their posts. More in Spanish: (AVN; http://www.avn.info.ve/contenido/maduro-ratifica-sus-cargos-ministra-para-defensa-y-al-jefe-del-ceofanb; El Universal, http://www.eluniversal.com/nacional-y-politica/140708/maduro-ratifica-a-melendez-como-ministra-de-defensa)
  
Council of State to analyze government transformation
President Nicolas Maduro has convened the Council of State for this week to tackle structural changes within the government structure, says Executive Vice-president Jorge Arreaza. Arreaza says discussions will include "a structural change of the State, including a review of all of its processes, fighting corruption and an efficient administration." (AVN, http://www.avn.info.ve/contenido/council-state-convened-tackle-government-transformation; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40072&idc=1)

Chinese President to visit Venezuela in July
Chinese president Xi Jinping will carry out an official tour through Argentina, Brazil, Cuba and Venezuela on July 17-23, according to Prensa Latina. (AVN, http://www.avn.info.ve/contenido/chinese-president-visits-venezuela-july)

US designates new chargé d' affairs to Venezuela, remains "concerned" over conditions here
The US government has designated a new chargé d'affairs to its Embassy in Caracas in an apparent attempt to bring about a rapprochement with the oil producing country. The position will be held by Lee MacClenny, according to a US State Department spokesperson, who would not say when the newly appointed official would arrive. State Department spokesperson Jen Psaki says the US remains "concerned" over "conditions on the ground" and "accusations made against the United States", but is open to improving the bilateral relationship. (El Universal, http://www.eluniversal.com/nacional-y-politica/140707/us-designates-new-charge-d-affairs-to-venezuela; and more in Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/mundo/eeuu-preocupado-por-venezuela-pero-abierto-a-mejor.aspx#ixzz36s6xXmPg; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/internacional/eeuu-sigue-preocupado-por-la--crisis-politica--en.aspx; El Universal, http://www.eluniversal.com/nacional-y-politica/140708/consideran-que-venezuela-y-eeuu-inician-acercamiento)

In Venezuela's latest media shift, EL UNIVERSAL newspaper sold
The owners of daily newspaper El Universal have sold a controlling stake of the company to a little-known Spanish investment firm, EPALISTICIA, marking the third sale of a major media group in Venezuela since last year. The sales last year of news channel GLOBOVISION and ULTIMAS NOTICIAS, the nation's most-read newspaper, resulted in changes to editorial coverage. At GLOBOVISION, which was once ardently anti-government, there was a reduction in coverage of the opposition, and at ULTIMAS NOTICIAS management changes led to a flood of resignations and dismantling of its investigative unit. EL UNIVERSAL has been owned by the Mata family, descendants of poet Andres Mata, who created the publication in 1909. (Reuters, http://www.reuters.com/article/2014/07/05/venezuela-newspaper-idUSL2N0PG0FP20140705; Bloomberg, http://www.bloomberg.com/news/2014-07-04/venezuelan-newspaper-el-universal-sold-to-undisclosed-buyer.html)

Vicente Fox terms Maduro an apprentice dictator
Former Mexican President Vicente Fox describes Venezuelan President Nicolás Maduro as "an apprentice dictator," and claimed he took power due to "a vulgar imposition" by his predecessor, Hugo Chávez He added that Chávez was "liable for destroying a nation, an economy, and the dreams and hopes of millions of Venezuelans." "Mr. Maduro is an apprentice dictator. He is weak in mind, in ideas, and in skills -the product of a vulgar imposition that continues the destructive task." (El Universal, http://www.eluniversal.com/nacional-y-politica/140707/vicente-fox-terms-maduro-an-apprentice-dictator)



The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger