November 29th, 2010

Economics, Trade & Business

Manufacturers call for policies to boost production

The long-awaited recovery of the Venezuelan industrial sector will have to wait another year. Although the government rhetoric has supported the results of the measures adopted after the devaluation, both the economic data and the private sector say otherwise. Ricardo Menéndez, Minister of Science, Technology, and Intermediate Industries (MCTII), praised last week the results of the Bicentennial Fund, created in January in order to boost production. Menéndez said that the government has provided VEB 2.8 billion (USD 651.16 million) to some 300 companies that, in some cases, managed to grow by 40 percent and have created 9,700 jobs. (El Universal, 11-29-2010; http://english.eluniversal.com/2010/11/29/en_eco_art_manufacturers-call-f_29A4788731.shtml)

Joint government and private sector effort to bring down inflation

A partnership between the private sector and the government is needed to lower inflation, said the president of the Central Bank of Venezuela, Nelson Merentes, who considers prices as "a complex issue." "There must be many links between government and the private sector to stop the rise in prices," said Merentes during the forum "Returning to the path of growth for the year 2011.” On the country’s economic growth, the president reiterated that "although there has been a fall, there is a change of trend." (El Mundo, 11-29-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=10979)

Seeking cash, Chavez looks to sell Citgo

President Hugo Chavez is promising to build new public housing complexes, boost social programs and renovate the long-neglected Caracas subway - and he needs money. The ambitious plans will squeeze Venezuela's coffers at a time when oil earnings have slipped and Chavez is sending his foreign allies generous amounts of crude on credit. So he has raised a possibility that once seemed remote: selling off Venezuela's U.S.-based oil company, Citgo Petroleum Corp. For Chavez, it's an idea driven both by hard-money realities and by politics. (The Washington Post, 11-28-2010; http://www.washingtonpost.com/wp-dyn/content/article/2010/11/28/AR2010112801646.html)

Nationalized briquette companies

After 18 months, the transformation of the iron briquette manufacturing companies into state enterprises has not materialized, although the three major companies (Comsigua, Venprecar and Orinoco Iron) have a "provisional socialist model." The companies are just "vegetating" which is the worst case scenario. They are totally paralyzed, their production ranges between 40% and 48% of what was usual in the good times, the marketing and management of their finances was confiscated, so there is no investment, maintenance is minimal and workers’ socio-economic achievements are "frozen." (Tal Cual, 11-29-2010; www.talcualdigital.com/ediciones/2010/11/29/default.asp)

Transition to socialism

When looking at indicators such as inflation, fall of wages, falling per capita GDP, the reduction of national production and hence greater reliance on the oil industry, one could simply conclude that the government is totally inefficient. But others agree that the country’s current situation is not just a product of bad management, but the result of government practices to move towards a political project called XXI century socialism. Since 2007, the government has been explicit about its intentions of changing the prevailing economic model in Venezuela, whose guidelines are expressed in the 2007-2013 Simon Bolivar National Project. It states the model will work with new sources of income generation, distribution and appropriation of surplus, and it will be composed primarily of Socialist Production Companies. (Tal Cual, 11-29-2010; http://www.talcualdigital.com/ediciones/2010/11/29/default.asp)

Commission of 1% on bond transactions

Bond transactions in the Foreign Currency Bond Trading System (SITME) will have to pay a commission of 1% from December 1. The Central Bank of Venezuela (BCV) published a resolution in the Official Gazette which establishes the maximum commissions, fees or surcharges for any bank transaction. It includes the collection of 1% for each operation with securities in foreign currency. (El Mundo, 11-29-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=19&Id_Noticia=38572)

BBVA denies trying to sell Venezuela bank for $2 bn

Spanish finance group BBVA denied it was trying to sell its Venezuelan unit after a prominent former government official said on Sunday the subsidiary was on offer for $2 billion. "The board of directors of BBVA Banco Provincial emphatically denies the irresponsible and unconfirmed information transmitted today on the program "Jose Vicente Hoy," the bank said in a statement posted on its website. (Reuters, 11-28-2010; www.reuters.com/article/idUSN2817674520101128)

Politics

WikiLeaks: France leadership believes Venezuela's Chavez "crazy"

According to Top Secret US documents of US diplomatic meetings in Paris, Sarkozy's top Diplomatic Advisor Jean-David Levitte (formerly the French ambassador to the United States) "observed that Venezuelan President Hugo Chavez is "crazy" and said that even Brazil wasn't able to support him anymore. Unfortunately, Chavez is taking one of the richest countries in Latin America and turning it into another Zimbabwe." (Latin American Herald Tribune, 11-28-2010; http://www.laht.com/article.asp?ArticleId=380224&CategoryId=10717)

Chavez vows to expedite socialist initiative

President Hugo Chavez is vowing to accelerate his drive to turn Venezuela into a socialist state and urging his supporters to become "true revolutionaries" as they prepare for crucial political battles ahead. "Radicalize the revolution!" Chavez trumpeted in a newspaper column published on Sunday, calling on his allies to "create truly revolutionary groups; the vanguard of the people, a party and movement that guarantees the construction of socialism." (Miami Herald, 11-27-2010; http://www.miamiherald.com/2010/11/27/1945864/chavez-promotes-general-criticized.html)

Transport & Logistics

Lift restrictions on sea and airport

The Minister for Transport and Communications (MTC), Francisco Garces, reported Sunday that the restrictions which were implemented as security measures because of the rain have been lifted at sea and airports,. "They have lifted restrictions at sea and air, but there are restrictions to sailing of small boats, mostly because of bad weather, maintenance problems on the islands of Curacao and Aruba, but the rest of the weather has improved," said Garces from Tocuyo off the Coast in Falcon state. (Ultimas Noticias, 11-28-2010; www.ultimasnoticias.com.ve/Noticias/Levantan-restricciones-maritimas-y-aeroportuarias.aspx)

Petroleum & Energy

Venezuela's Cardón refinery stops operations amidst storm

Venezuela's 310,000-bpd Cardón refinery halted operations on Monday due to an electrical fault caused by a storm, a source of the state-run oil refinery said. The nearby 645,000-bpd Amuay refinery was also affected, and four of its units were shut down due to "rains and an electrical storm," a source said. (El Universal, 11-29-2010; http://english.eluniversal.com/2010/11/29/en_eco_esp_venezuelas-cardon-r_29A4790217.shtml)

Pdvsa still has debts with oil suppliers incurred in 2009

Given the difficult financial situation facing state-run oil company Petróleos de Venezuela (PDVSA) since 2009, Venezuela's main company still has a large debt to oil service providers. Guillermo Romero, CEO of the local subsidiary of Houston-based oilfield services company Baker Hughes, said that "the debt has improved over the past two quarters, but it is still important. There are no payment arrangements with PDVSA. The state-run oil company has shown its good will and has said that it is making all efforts to honor its commitments." However, Romero said that "we asked PDVSA to pay old debts which affect us from the financial point of view." (El Universal, 11-29-2010; http://english.eluniversal.com/2010/11/29/en_eco_art_pdvsa-still-has-debt_29A4789051.shtml)

Corpoelec to suspend electric service to big debtors

Corpoelec plans to suspend the electric service to governorships, mayoralties, public institutions and high-consumers (25KVA) that have large debts with the industry, informed the company’s Distribution and Marketing Commissioner Joaquín Osorio. Also, he said next year they will do the same within the popular sectors. (Veneconomy, 11-27-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24066&idc=2)

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.