Economics & Finance
Venezuela oil tax to net billions before Chavez vote
New Venezuelan taxes on windfall oil revenue will let socialist President Hugo Chavez boost spending on popular social programs by billions of dollars ahead of his re-election bid next year. They set a top rate of 95 percent on some oil income and are Chavez's latest move to increase the state's share of the OPEC member's main export. During 12 years in power he has nationalized most of the South American nation's oil industry. His government predicted on Tuesday the new tax rates will bring in between $9 billion and $16 billion this year if oil prices keep rallying. Chavez has earmarked the money for a social spending fund and is already splashing it around. "This is justice," he said as he unveiled pay rises of up to 66 percent for public sector workers. (Reuters, 04-27-2011; http://www.reuters.com/article/2011/04/26/us-venezuela-oil-idUSTRE73P6Z920110426)
Wage hike expected to boost Venezuela's inflation
President Hugo Chavez's decision to increase the minimum wage 25 percent is expected to elevate Venezuela's already high inflation, economists and opposition lawmakers said Wednesday. Chavez's decree involves a 15 percent boost in pay at the beginning of May, then a 10 percent rise Sept. 1. The wage hike announced Tuesday will benefit more than 6 million people, who will earn $360 a month once the full increase is phased in. Chavez also gave public employees a 45 percent raise. Government officials said they hope to keep inflation in check despite wage hikes. Labor Minister Maria Iglesias suggested greedy businessmen are partly responsible for Latin America's worst inflation, accusing them of unjustifiably inflating prices. (Forbes, 04-27-2011; http://www.forbes.com/feeds/ap/2011/04/27/general-lt-venezuela-inflation_8438194.html)
PDVSA transfers U$D1.37 Bln to Venezuela's National Development Fund
Petroleum Minister and PDVSA President Rafael Ramírez said the state-owned Petróleos de Venezuela (PDVSA) has transferred $1.37 billion to the Venezuela’s National Development Fund (FONDEN) in the first quarter of this year, to be invested in socioeconomic development projects. The announcement was made during the presentation of the Law that creates a special tax on windfall and exorbitant oil prices in international oil markets. (AVN, 04-27-2011; http://www.avn.info.ve/node/54954)
JP Morgan criticizes lack of transparency in government figures
In a report, the U.S. firm JP Morgan described a "puzzling" lack of transparency in government figures in regard to the surplus oil which is obtained by rising oil prices. It notes that it has become difficult to make accurate estimates due to the opacity in the official numbers. The document also points to a drop in international reserves pegged at U$D 3.6 billion to date this year. The firm claims that U$D 2 billion are attributable to transfers to the National Development Fund and the rest may have been used by the Ministry of Planning and Finance for repayment of some of the titles of the Republic, which became due on April 20 2011. (El Nacional, 04-28-2011;
Tariffs could be reduced by 6 points once Venezuela enters MERCOSUR
Eduardo Porcarelli, executive director National Council for Investment Promotion (CONAPRI) says that once Venezuela becomes a full member of MERCOSUR, the common external tariff – which currently averages 13% - should drop by 3 percentage points. "In the specific case of agricultural and agroindustrial products, the existing tariff which is 16.66% on average, would decrease more than six percentage points, because MERCOSUR has a 10% tariff for third countries, "said the expert. Juvenal Arvelaez, chief executive of the Venezuelan Chamber of the Food Industry (CAVIDEA) agrees with Porcarelli that "the entry of Venezuela into Mercosur will mean an average 40% reduction in the protection of agricultural and agribusiness sector in Venezuela in relation to third countries." (El Mundo, 04-27-2011; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=19&Id_Noticia=54171)
Businessmen warn that entering MERCOSUR now is harmful
Private sector spokesmen say it is the worst time for Venezuela to enter into MERCOSUR. "At this time, accession to MERCOSUR would be really harmful for the country's industry," said Ismael Pérez Vigil, the executive president of the Venezuelan Confederation of Industries (CONINDUSTRIA). After withdrawal from the Andean Community of Nations (CAN), government authorities' priority is to enter the Common Market of the South (MERCOSUR)
(El Universal, 04-27-2011; http://english.eluniversal.com/2011/04/27/businessmen-warn-that-membership-in-mercosur-is-harmful.shtml)
Minister of Labor: Wages for 21% of workers still do not cover the cost of the basic food basket
María Cristina Iglesias, the Minister of Labor and Social Security, said that 21% of the working population earns the minimum wage, compared with about 65% 11 years ago. There are about 2.7 million workers earning the minimum wage, according to data reported by the Minister of Labor. From May 1, they will be paid VEB 1,407.4 (U$D 327.30), after a 15% increase in a first tranche and an additional 10% raise from September 1. (El Universal, 04-27-2011; http://english.eluniversal.com/2011/04/27/minister-of-labor-21-percent-of-workers-still-fail-to-cover-the-cost-of-food-basket.shtml)
Canary Islands seek solution for seizure of companies in Venezuela
The local parliament of the Canary Islands requested the Spanish government to seek negotiations to work out the "unresolved" serious problems due to the seizures of Spanish companies in Venezuela, undertaken by Venezuelan authorities. The resolution shows all political groups are aware of the difficulties faced by Spanish companies seized by the Venezuelan government and the implications for those involved. (El Universal, 04-27-2011; http://english.eluniversal.com/2011/04/27/canary-islands-seek-solution-for-seizure-of-companies-in-venezuela.shtml)
Commodities
Venezuela sets oil windfall tax for oil price at U$D 40-70
The Venezuelan government set an additional 20% tax on oil windfall revenues by state-run oil company Petróleos de Venezuela (PDVSA) and its joint ventures whenever oil prices fluctuate between U$D 40 and U$D 70 per barrel, as per decree No. 8,163, published in the Extraordinary Gazette No. 6,022 with the Law that creates a special tax on windfall and exorbitant oil prices in international oil markets. "When the monthly average of the Venezuelan basket of liquid hydrocarbons in international markets is above the price set in the Budget Law for that fiscal year, but not higher than U$D 70 per barrel, a 20 percent tax will be levied on the difference between both prices," according to the Official Gazette. (El Universal, 04-27-2011;
Economic emergency was declared in ALCASA
Company president, Elio Zayago, publicly declared a state of "financial and operational emergency”, thus admitting that the situation is untenable in CVG ALCASA. "It is no secret that when this administration, under workers' control took over management of the plant, it received more than 50% of diseased cells, with high temperatures and exceeded nominal life. These conditions, which are joined by strikes that prevented the proper treatment and low cash flow generated (sic) a weakness in terms of acquisition time, coke, tar and fluoride, "he explained Thursday at a news conference. More information in Spanish. (El Universal, 04-29-2011; http://www.eluniversal.com/2011/04/29/fue-declarada-la-emergencia-economica-en-alcasa.shtml)
Venezuela Oil Hits $110.33
Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending April 29 rose to U$D110.33 from the previous week's U$D108.29, raising the average for the year to U$D95.04, above the previous high set by 2008's U$D86.49 average. (Latin American Herald Tribune, 04-29-2011; http://www.laht.com/article.asp?ArticleId=392690&CategoryId=10717)
Venezuela's PDVSA Discussing Tech Projects With China Firms
Venezuelan state oil company Petróleos de Venezuela said Thursday that it is discussing possible technological development projects for refining and upgrading of crude oil with an advisory group from the China Development Bank. (The Wall Street Journal, 04-28-2011; http://online.wsj.com/article/BT-CO-20110428-721423.html)
PDVSA said to be building seven thermoelectric plants to add 1,954 MW by 2012
Electric Energy Minister Alí Rodríguez Araque says Venezuela’s state-run oil company Petróleos de Venezuela (PDVSA) is building seven thermoelectric plants that will add 1,954 MW to the National Electric System in 2012. He has recently said that “In total, 800 megawatts will be added by PDVSA by the end of 2011”. By the end of 2011, the Government claims it will to add 2,568MW in total. In addition, to the 800 MW from PDVSA, the National Electric Corporation (CORPOELEC) expects to add 1,593 MW and the Basic Industries and Mining Ministry other 175 MW for the National Electric System. (AVN, 04-27-2011; http://www.avn.info.ve/node/54975)
Venezuelan steelmaker recovers after power crisis in 2010
Venezuelan state-run steelmaker Siderúrgica del Orinoco (SIDOR) reported an output of 767,000 tons of liquid steel in the first quarter this year, said Pedro Acuña, the main director of Class B shareholders on SIDOR's board of directors.
Production in the same period of 2010 totaled 308,000 tons, amid power rationing implemented in Guayana's basic industries, which undermined SIDOR's regular operating performance. The output of Venezuela's main steelmaker rose 149% in 2011 compared to 2010. (El Universal, 04-29-2011;
Politics
Some 25 foreign ministers prepare a summit to set up a "parallel OAS"
Latin American and Caribbean foreign ministers are meeting in Venezuela to prepare a presidential summit to be held in Caracas in July in order to establish a new regional body that excludes the United States and Canada. Ministers and diplomatic representatives from over 25 countries are discussing regional integration and development issues, and will prepare the agenda of the presidential summit to be held in Venezuela on July 5. The Presidents and Heads of State of the region will outline the Charter of the Community of Latin American and Caribbean States (CELAC), which aims to be an Organization of American States that excludes the United States and Canada. (El Universal, 04-26-2011;
Venezuela-Colombia relations benefit the entire region
Colombian Foreign Affairs Minister Maria Angela Holguin has said that bilateral relations with Venezuela will not be “derailed” by any differences because, Colombia is working hard to keep and improve the ties with its sister nation. “The relation, as you well know, has a lot of issues to deal with day after day. Many things happen in the border, which is big, issues are many, and there are many critics. It is not an easy relationship, but the Colombian Government is committed to it, the President Santos and I have placed this relationship as a priority for Colombia. We believe it not only benefits the people of Colombia and Venezuela, but the entire region and we will keep working for such purpose”. (AVN, 04-27-2011; http://www.avn.info.ve/node/54943)
Cardoso urges Rousseff not to be contradictory on Venezuela
Brazil's former President Fernando Henrique Cardoso asked current Brazilian President Dilma Rousseff and Foreign Minister Antonio Patriota to be "sensitive enough" to deal with criticism from the Venezuelan government, without damaging the relationships and the dialogue between the two countries. "It appears that, as regards human rights, she (Rousseff) has been more consistent in her protest, but Brazil has common interests with Venezuela and we cannot all of a sudden have an attitude that could be regarded as contradictory on Venezuela". (El Universal, 04-27-2011; http://english.eluniversal.com/2011/04/27/cardoso-urges-rousseff-not-to-be-contradictory-with-venezuela.shtml)
Chavez announces a Libyan delegation sent by Qaddafi is in Venezuela
President Hugo Chavez has announced that a Libyan delegation sent by Muammar Qaddafi has arrived in here seeking international support for a truce in the Libyan conflict. The delegation will hold talks with Chavez’s government to see if members of the Bolivarian Alternative for the Americas, a trade bloc spearheaded by Chavez, and other Latin America countries can help efforts to restore peace to Libya, said Foreign Minister Nicolas Maduro. (Bloomberg, 04-26-2011; http://www.bloomberg.com/news/2011-04-26/libyan-delegation-sent-by-qaddafi-in-venezuela-chavez-says-1-.html)
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