October 25th, 2010

Economics, Trade & Business

36.7 percent of items missing from Venezuelan shelves

The fact that end users do not find goods at the place and the time that they look for them not only entails a higher expenditure -since shortages have increased prices- but a waste of time because many customers have to go to other points of sale to get such products. The survey called Goods Missing from Shelves (PFA) 2010, conducted by consultanting firm GS1 Venezuela and released by the Venezuelan Chamber of Food Processing Industries shows that 35.76 percent of goods are not available at the usual shelves on sales floors. This means that 67,662 goods out of the 189,237 products analyzed in the study were missing from the shelves. The index shows a 3.4-percent slowdown in 2010 versus 39.1 percent in 2009. (El Universal, 10-25-2010; http://english.eluniversal.com/2010/10/25/en_eco_art_food-items-missing-f_25A4650771.shtml)

Venezuelan gov't: Non-oil GDP to decline 2.6 percent this year

The Venezuelan government has estimated that the economy will shrink 2.5 percent compared to an initial estimate of 0.5 percent growth, based on one of the documents used to prepare the 2011 Budget Law. According to the 2011-2013 multi-year framework, the Venezuelan government estimates that the non-oil gross domestic product will decline 2.6 per cent at the end of the year, while oil activity will fall 1.4 percent. (El Universal, 10-25-2010; http://english.eluniversal.com/2010/10/25/en_eco_art_venezuelan-govt:-no_25A4652131.shtml)

Socialism to be consolidated with additional funds for production districts

During the introduction of the 2011 Budget Bill, the Minister of Planning and Finances -Jorge Giordani- said that the means of production will eventually be of a social nature. To that end, a new economic system is to be developed. Consequently, special "production districts" should be encouraged and will receive more funds. Ending in 2007, the Plan for Economic and Social Development intended to bolster the socialist model was re-enforced. While the budgets for FY2008, 2009 and 2010 were constructed according to that program, the draft budget for FY2011 delves into the recently defined system of social property (El Universal, 10-25-2010; http://english.eluniversal.com/2010/10/25/en_eco_esp_socialism-to-be-cons_25A4650899.shtml)

PDVSA bond issue attracts orders in excess of $ 6 billion

In the international public offering for its bond due in 2017, Petróleos de Venezuela (PDVSA) received 105,357 orders for a total of 6.985 million dollars, far exceeding the amount specified in the call for up to 3,000 million dollars. The amount allocated for the issuance stood at U.S. $ 3,000 million, maturing on November 2, 2017. (AVN, 10-25-2010; http://www.avn.info.ve/node/24894)

In Portugal, agreements would be valued at near €1 billion

Among the agreements signed by José Sócrates and Hugo Chávez are the construction of two asphalt tankers at the Viana do Castelo shipyards; the purchase of a ferry, which could be extended to “four or five,” according to Chávez; the creation of a mixed natural gas transportation and liquefaction company and the contracting of 12,500 pre-fabricated housing units for Venezuela. (Veneconomy, 10-25-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23614&idc=1)

Politics

Venezuelan President Hugo Chávez to report on reached agreements

Referring to agreements reached during his recent international tour, Venezuelan president Hugo Chavez asserted that Venezuela has taken a "place of dignity in the current world, in the newborn world, the multipolar world. The world has changed; it is no longer the world we had ten years ago. In that multipolar world…, the Venezuelan fatherland, the Venezuelan people, the Venezuelan revolution has started to play a fundamental role which has been recognized throughout the planet." (El Universal, 10-25-2010; http://english.eluniversal.com/2010/10/25/en_pol_esp_venezuelan-president_25A4651331.shtml)

Presidential tour prioritizes agreements on housing, energy and trade  

The 12-day tour completed by the President of Venezuela Hugo Chavez through Asia, Europe and Africa had as a priority the signing of agreements on housing, energy security and trade, so as to guarantee Venezuelans' welfare.
At his arrival to the International Airport Simon Bolivar on Sunday night, Chavez stated that the work meetings held with his counterparts of Russia, Belarus, Iran, Ukraine, Libya, Syria and Portugal were productive and he emphasized that the 69 accords were inked “with the head and the beating heart, thinking in Venezuela.” (AVN, 10-25-2010; http://www.avn.info.ve/node/24892)

Venezuelan VP: Companies will be nationalized as required

Last Friday, Venezuelan Vice-President Elías Jaua defended the nationalization of private companies. In his opinion, the action is lawful. The government nationalization policy "is aimed at dismounting the structure of monopolies established in Venezuela to exploit, exclude and reign over the people," Jaua said. (El Universal, 10-22-2010; http://english.eluniversal.com/2010/10/22/en_eco_esp_venezuelan-vp:-compa_22A4641815.shtml)

The Government is preparing to take 450,000 hectares in 2011

Further measures expropriating farms are expected in 2011. The National Land Institute, an entity attached to the Ministry of Agriculture, seeks to apply next year to pass measures by the state under which 450,000 hectares of rural land may be expropriated. Reports on the draft for the 2011 budget law indicate that the office will continue the policy of fighting against large estates to strengthen "XXI century socialism". According to the Ministry of Agriculture, in the last decade they have "rescued" more than 3 million hectares which were in the hands of private producers. In most cases, the Government alleged that the lands were idle and that the occupants did not have titles to prove ownership. (El Nacional, 10-25-2010; http://www.el-nacional.com/www/site/p_contenido.php)

Petroleum & Energy

Venezuela Invests $800 Million in Iranian Gas Project

Venezuela has agreed to invest about $800 million in the development of phase 12 of South Pars, the largest gas field in the world, the Iranian energy projects coordinator, Hamad Akbari, said on Sunday. The investment will be made by Venezuelan state-owned oil giant PDVSA, providing 10 percent of the total financing for this phase of the project, Akbari told the Shana energy news agency. “The final agreement will be wrapped up in a maximum term of three months,” the energy official said. (Latin American Herald Tribune, 10-24-2010; http://www.laht.com/article.asp?ArticleId=373724&CategoryId=10717)

PDVSA lost $ 600 million in discounted crude sales to Belarus

Petróleos de Venezuela is already sending oil to Belarus at a discount, long before the agenda was set for the recent meeting between Presidents Hugo Chavez and Alexander Lukashenko in Minsk. In April this year, PDVSA began to comply with that request. Lukashenko's government asked for a discount of 30% in the price of oil, which was the percentage rebate that - until December 31, 2009- was given to Belarus by Russia. This would imply PDVSA selling crude at an equivalent to $ 48.50 per barrel; compared to an average price of $ 7 According to industry estimates, Venezuela this year will receive only $ 1.4 billion for the oil bill to Belarus, where the amount should be close to $ 2 billion. (El Nacional, 10-25-2010; http://www.el-nacional.com/www/site/p_contenido.php)

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.