January 24th, 2011

Economics & Finance

Deadline for Venezuela's withdrawal from CAN is looming

Time is running out. Venezuela's obligations to the Andean Community of Nations (CAN) will end on April 22 and it is unknown whether the South American country will return to the multilateral organization or if Venezuela will reach an agreement with Colombia and the other CAN members. Local businessmen face a risky future due to this lack of definition, because they do not know the framework that will govern Venezuela's trade relations with countries such as Peru, Bolivia, Ecuador and, specially Colombia. Experts warn that a framework for trade agreements with the Andean nations should be established. (El Universal, 01-24-2011; http://english.eluniversal.com/2011/01/24/en_eco_esp_deadline-for-venezue_24A5036211.shtml)

Government will condone farmers’ debts

President Chávez said yesterday his government would soon announce all debts of farmers who lost their crops as a result of the heavy rains of November and December 2010 will be condoned via a decree-law within his Special Powers. (Veneconomy, 01-24-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24608&idc=2)

Bad news for the Venezuelan economy

The economic slowdown, which has hit Venezuela for two consecutive years, had a direct effect on households. The impact hit hardest the lowest social strata of the population, not only because the number of families in this social level soared, but also because they are consuming less staple products. (El Universal, 01-21-2011; http://english.eluniversal.com/2011/01/21/en_ing_esp_bad-news-for-venezue_21A5022771.shtml)

VenEconomy: Ratifying the Central Bank’s Destruction

In March 2006, the economists José Guerra, Orlando Ochoa P., Jesús Rojas D., and Oscar García Mendoza filed an appeal for annulment of the amendments to the Central Bank of Venezuela Act published in Gaceta Oficial Nº 38,232 of July 20, 2005, before the Constitutional Chamber of the Supreme Tribunal of Justice on the grounds that they were unconstitutional.

Now, nearly five years after the petition was filed and after $38.8 billion have already been transferred to Fonden and frittered away, the highest court in the land, accompanied by Justice Luisa Estela Morales, the judge reporting the case, has declared the petition for annulment to be without merit. This decision ratifies the destruction of the Central Bank. (Veneconomy, 01-24-2011; http://www.veneconomy.com/site/modulos/m_visor.asp?pub=2939)

Chávez announces monitoring and ceiling on private earnings

In his annual report recently submitted to the National Assembly (AN), Venezuela's President Hugo Chávez reported on regulation of earnings and increasing surveillance of businesses to keep on "fighting against speculation." "Everything has a limit," he said and then disclosed the establishment of the Superintendence of Costs and Prices. President Chávez also reported on a 1.9-percent drop of the economy in 2010 and inflation rate at 27.2 percent. (El Universal, 01-21-2011; http://english.eluniversal.com/2011/01/21/en_ing_esp_chavez-announces-mon_21A5008691.shtml)

Alpla calls for end to strikes at Coca-Cola plant in Venezuela

Alpla de Venezuela S.A., a manufacturer of plastic bottles, called for an end to labor strife at the Venezuelan unit of Coca-Cola Femsa SAB. The worker strikes endanger Alpla’s productivity and “financial” stability, Alpla General Manager Bernard Baader said. Alpla is the main supplier of plastic bottles to Coca-Cola Femsa and employs 513 workers in Venezuela, the statement said. (Bloomberg, 01-22-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aXCaDfZAkjiA)

Commodities

Venezuelan oil basket climbs to USD 86.79 per barrel

The Ministry of Energy and Petroleum reported on Friday that the Venezuelan oil basket of crude oil and products ended the week at USD 86.79 per barrel. Therefore, Venezuelan oil price increased by USD 0.92 compared to the previous week. As a result, the average price of the Venezuelan oil barrel stands at USD 85.87 so far this year. (El Universal, 01-21-2011; http://english.eluniversal.com/2011/01/21/en_eco_art_venezuelan-oil-baske_21A5022291.shtml)

Venezuelan oil exports to the US fall in January

Total crude oil and products exports from the state-run oil company Petróleos de Venezuela (PDVSA) to the United States have shown a downward trend since mid 2010, in an erratic course characterized by dramatic ups and downs that have led to a 20 percent decrease in average oil exports between August and December 2010. According to data provided by the US Department of Energy, during the week ending on January 14, 2011 Venezuela only exported 549,000 barrels of crude oil and products to the United States. The previous week (January 3 to January 7, 2011), oil exports amounted to 1.02 million bpd, while in the period between December 27 and December 31, 2010 PDVSA had exported 650,000 bpd to the United States. (El Universal, 01-24-2011; http://english.eluniversal.com/2011/01/24/en_eco_esp_venezuelan-oil-expor_24A5034853.shtml)

Turkey could invest USD 2.4 billion in Venezuela

Minister of Energy and Natural Resources Taner Yildiz said on Monday that if the offer from state-run oil company Petróleos de Venezuela (PDVSA) to the Turkish government to engage in two oilfields at the Orinoco Oil Belt and in the construction of housing units in Venezuela materializes, Turkey could invest up to USD 2.4 billion. Yildiz did not provide further details about the funds that would be allocated to both the oil and construction projects. (El Universal, 01-24-2011; http://english.eluniversal.com/2011/01/24/en_eco_esp_turkey-could-invest_24A5035655.shtml)

Alange Energy Provides Update on Internal Review Process Including Recapitalization and Restructuring of the Company and Announces a C$50 Million Bought Deal Equity Financing

The Company announced today that Mr. Luis Giusti Sr. has stepped down as Chief Executive Officer and will remain on the board to provide his support to this process. The board will also ensure it has the resources available to oversee the execution of the strategic plan that is being implemented under new leadership and a new management team. (Marketwirw, 01-19-2011; http://www.marketwire.com/press-release/Alange-Energy-Provides-Update-on-Internal-Review-Process-Including-Recapitalization-TSX-VENTURE-ALE-1382645.htm)

The truth of PDVAL

That at least 130,000 tons of food were spoiled in government hands is no news. Venezuela entered a new year and the PDVAL case reopened. The Supreme Tribunal of Justice (TSJ) declared null and void charges against the three defendants. "Total approved funds amounted to USD 2,200,000.00," the Public Prosecutor Office stated in the paper published by the TSJ in December. That amount of money would be good to buy 4,400,000 liters of milk. (El Universal, 01-21-2011; http://english.eluniversal.com/2011/01/21/en_ing_esp_the-truth-of-pdval_21A5015053.shtml)

Politics

Friends, foes of Venezuela's Chavez stage rival marches to mark 53rd democracy anniversary

Allies and adversaries of President Hugo Chavez took to the streets of the capital by the thousands Sunday, staging rival demonstrations to commemorate the 53rd anniversary of Venezuela's democracy. Opposition supporters gathered along an avenue in eastern Caracas and chanted anti-government slogans while waving red-yellow-and-blue Venezuelan flags and banners labeling Chavez a despot. Many of the president's critics expressed concerns that Chavez is amassing power and cracking down on dissent. (Chicago Tribune, 01-23-2011; http://www.chicagotribune.com/news/nationworld/sns-ap-lt-venezuela-democracy-anniversary,0,4980107.story?track=rss)

Venezuelan residents abroad welcome call to protest against Chávez

The rallies called by President Hugo Chávez’s foes in about 25 cities, were finally carried out in seven cities: Miami, Madrid, Barcelona, Panama, San Juan, Paris and Amsterdam. Some demonstrators held banners labeling Venezuelan president as "a dictator." Dozens of Venezuelans gathered in Miami to protest against the political system championed by President Chávez. In the meantime, a rally in Madrid gathered Spaniards and Venezuelans who used the slogan: "Stop the dictatorship in Venezuela."The move was apropos the commemoration of the 53rd anniversary of the overthrow of General Marcos Pérez Jiménez. (El Universal, 01-24-2011; http://english.eluniversal.com/2011/01/24/en_pol_esp_venezuelan-residents_24A5035531.shtml)

Legislation over industrial zones

President Chávez suggested the creation of laws to regulate industrial zones during his tour of the El Algodonal lots confiscated to Empresas Polar. He said there should be legislation on what constitutes an industrial zone because the warehouses of private or State companies should be outside cities. (Veneconomy, 01-21-2011; www.veneconomy.com/site/index.asp?ids=44&idt=24591&idc=3)

Chávez and Correa will meet in Salinas on Jan. 27

After three previous meetings were suspended at the last minute, the 9th Presidential Meeting between Ecuador and Venezuela will be finally held in the Ecuadorian city of Salinas on January 27. (Veneconomy, 01-21-2011; http://www.veneconomy.com/site/index.asp?idt=24594&idc=1&NPag=1, 2&Start=0, 15&aaD=2011&ids=44&Var_Send=1&mmD=01&ddD=21&mmH=01&ddH=24&aaH=2011&Send=Buscar)

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.