November 25th, 2010

Economics, Trade & Business

Venezuelan exchange rate could be unregulated

Asdrúbal Oliveros, director of research firm Ecoanalítica, considers that during the first two months of 2011 there could be an increase in the volume of foreign currency in the market and a change in the exchange rate band that is traded in the Transaction System for Foreign Currency Denominated Securities (Sitme). He said that the daily demand for foreign currency through that system has reached about USD 100 million. (El Universal, 11-24-2010; http://english.eluniversal.com/2010/11/24/en_eco_esp_venezuelan-exchange_24A4770857.shtml)

Venezuela's business sector rejects violation of economic rights

The Federation of Trade and Industry Chambers (Fedecámaras), Venezuela's main business association, condemned the "violation" of the economic rights enshrined in the Constitution and the insistence of the Executive Office on establishing a "socialist economy." "The whole country has witnessed how the economic rights enshrined in the Constitution have been violated and scorned with impunity. As a result, the national production structure, which had been consolidated for decades with great effort, has been greatly impacted and was downsized with the consequent decrease in the volume of goods and services produced in Venezuela," said Noel Álvarez, the president of Venezuela's main business association, in a press release. (El Universal, 11-24-2010; http://english.eluniversal.com/2010/11/24/en_eco_art_venezuelas-business_24A4770491.shtml)

Consecomercio published the results of its latest survey of its affiliate members and they show the sales of the sector dropped 5.5% in the third quarter for an annual drop of 30.4% while unemployment increased by 6.1% for 23% annually. Also, the survey shows that 70.5% of the companies polled have not made any investments in this last quarter and only 10% of the dollars used to import were obtained from Cadivi. (Veneconomy, 11-23-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24032&idc=3)

External debt on the rise

Venezuelan external debt was up to $68,884 million during this year’s third quarter which represents a 9.61% increase compared to the same period last year, according to data published by the Venezuelan Central Bank (BCV) in its web page on Tuesday. Out of the total amount, $60,390 million corresponds to the public sector while the remaining $8,494 million corresponds to private debt. (Veneconomy, 11-23-2010; http://www.veneconomy.com/site/index.asp?idt=24030&idc=2&ids=44&Var_Send=1&mmD=11&ddD=23&mmH=11&aaD=2010&ddH=25&aaH=2010&Send=Find)

Venezuela ends negotiation with French Casino Groupe, purchases 81.2% of Cativen shares

“Venezuela now owns most of Cativen shares, after closing the purchase on Thursday of 81.2% of them,” pointed out the Vice President of Venezuela Elias Jaua. Thus, the Government ends the negotiations with the French transnational Grupo Casino and concretes the purchase of most of the shares of the Chain of Venezuelan Stores (Cativen), composed of the food distribution network Bicentenary (formerly known as Cada) and the Bicentenary hypermarkets (formerly known as Exito). (AVN, 11-25-2010; http://www.avn.info.ve/node/30261)

Minerven aims to produce over 8,000 kilos of gold per year from 2011

The state-owned Mining Company of Venezuela (Minerven) unveiled a project for the comprehensive upgrading of its equipment and the expansion of operations, enabling it to produce more than 8,000 kilos of gold per year from 2011. This was announced by president of the company –a subsidiary of the Corporación Venezolana de Guayana (CVG)- , Luis Herrera, who noted that this plan will be financed with resources from the Central Bank of Venezuela (BCV). Herrera said the plan will be implemented in 100 days and aims primarily to return the production of different plants affected by the lack of spare parts and technological obsolescence to their previous levels. "These problems have reduced 50% of our production capacity, leaving it at 4,500 kilos a yea.  Following new investments, we hope to the production levels we enjoyed just two or three years ago," he said. (AVN, 11-25-2010; http://www.avn.info.ve/node/30126)

PDVSA plans to issue 3,000 million dollars in bonuses per year

PDVSA plans to issue between 3,000 million and 4,000 million dollars a year in bonds to continue to be financed in the medium term, Reuters reported. The oil company has been increasing its emissions in recent years to support its heavy cost structure and expenses, largely directed to social programs devised by President Hugo Chávez. "PDVSA plans to continue issuing bonds at a rate of between 3,000 (million) and 4,000 million dollars a year. It is not referred to a plan to significantly reduce the level of debt," said a source close to the company, who declined to be identified. (El Universal; http://www.eluniversal.com/2010/11/24/eco_art_pdvsa-preve-emitir-3_2116616.shtml)

Politics

Venezuela Globovision’s Zuloaga Requests U.S. Political Asylum

Guillermo Zuloaga, principal owner of Venezuela’s opposition television network Globovisión, said he has requested political asylum in the U.S, according to an interview broadcast on CNN en Espanol. Zuloaga, who is wanted in Venezuela on usury charges, said the process for requesting asylum was nearing conclusion. (Bloomberg, 11-24-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=akb_UMvs1pgg)

National Assembly to limit funds for NGOs involved in politics

President Hugo Chavez's requests have been heard. On Tuesday evening, the Venezuelan Head of State said in the National Assembly: "I beg you to pass a very strict law" to prevent political parties groups and non-governmental organizations from being financed by the "US empire."
Roy Daza (ruling United Socialist Party of Venezuela, PSUV, state of Aragua), the President of the National Assembly's Foreign Policy Committee, said on Wednesday that the Venezuelan Parliament will discuss on December 1 a "final draft" of the Bill on International Cooperation. (El Universal, 11-25-2010; http://english.eluniversal.com/2010/11/25/en_pol_esp_national-assembly-to_25A4775451.shtml)

Petroleum & Energy

Venezuela is touting a vast natural gas discovery off its coast

Energy and Oil Minister and PDVSA president Rafael Ramirez said Monday that the latest exploratory drilling has confirmed "extraordinary results": about 15 trillion cubic feet of gas under the sea floor in a place where experts once thought there was only a fraction of that amount. However, energy analysts caution that Venezuela remains far from being able to sell its gas internationally and is still working on trying to meet its domestic demand. (Veneconomy, 11-23-2010; http://www.veneconomy.com/site/index.asp?idt=24016&idc=4&NPag=2&Start=15&aaD=2010&ids=44&Var_Send=1&mmD=11&ddD=23&mmH=11&ddH=25&aaH=2010&Send=Find)

Studied arbitration ban oil contracts

The Venezuelan Government is not fond of accepting decisions made by international courts regarding its oil and gas industry.  Consequently, the Executive Branch is studying the possibility of prohibiting arbitration agreements in contracts involving or oil and gas activities. (El Universal, 11-25-2010; http://www.eluniversal.com/2010/11/25/eco_art_estudian-prohibicion_2117864.shtml)

Venezuela says nuclear reactor for peaceful uses

A nuclear reactor that Venezuela plans to build with Russian help will be used to generate electricity and for medical and industrial purposes - not to make weapons, according to an agreement published Wednesday. The accord, which appeared in the Venezuelan Official Gazette, sets limits on the enrichment of uranium and says the reactor will not be used for "any military objective." (The Washington Post; http://www.washingtonpost.com/wp-dyn/content/article/2010/11/24/AR2010112406352.html)

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.