Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, May 13, 2011

May 12th, 2011

Economics & Finance

Electricity rationing to start
Venezuelan officials will implement electricity rationing throughout much of the country after a major power failure cut nearly 3,000 megawatts of the national grid supply. Authorities have said that 90% of the power supply has been restored after roughly a dozen states were affected by the interruption. (Wall Street Journal,

Brazil safest, Venezuela worst according to the Latin Security Index
The safest and most dangerous countries in Latin America for foreign multinational executives: Brazil and Panama have become safer for foreign multinationals and executives, while Venezuela has worsened further, according to the fifth annual Latin Security Index developed by FTI Consulting Ibero America for Latin Business Chronicle. Overall, however, Latin America remains unchanged from a year ago. The Latin Security Index takes into account how each country in the region is doing related to public insecurity, with a special focus on the business community. Apart from polling its business contacts in the region related to issues affecting their security, FTI analyzes government statistics at the federal, state or province and municipal levels in areas such as homicides, serious crime, cargo theft, home invasions, kidnapping, political and labor unrest, riots and violent demonstrations and drug trafficking, as well as the efficacy of government programs put into place to combat these problems. (More information available for subscribers at

Venezuelan exports to the US up 27.7% during the first quarter
Venezuelan exports to the United States amounted to U$D 10.34 billion in the first quarter of 2011, a 27.76% increase compared with the same period last year, when the South American country sold the US goods amounting to US$D 8.09 billion, according to data reported by Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM). Venezuelan exports to the US totaled U$D 3.83 billion in March 2011, thus climbing 34.49% over February 2011 and up 21.31% compared to March 2010. Meanwhile, Venezuelan oil exports to the US surged 28.79% in the first quarter compared to 2010. This represents an additional income amounting to some U$D 2.25 billion. (El Universal, 05-12-2011;

Former BCV chief analyst says inflation for the last 12 months was 40%
Economist Victor Olivo, who for over 20 years managed figures at the Economic Research Department of the Central Bank says it is not the institution it once was after the law was reformed in 2005. He says their numbers are suspect. He is not optimistic about the good omens coming from the Bank about growth acceleration lowered inflation "Fight against inflation? What? If everything here is becoming more expensive." More information in Spanish. (El Nacional; 05-11-2011;

Analysts market decline in Venezuelan bonds
Investment experts note that the drop in oil prices and the dollar's recovery in the international market set to "Venezuelan bonds on the verge of suffering a major technical correction."
Banctrust analysts suggest that "there are technical reasons to think the Venezuelan bonds may experience a correction close to 7%," so they recommend buying protection. No problems with the risk of Venezuela. "However, the more we identify in the short term price is derived by a negative external shock". (El Mundo, 05-13-2011;

Brokerage firms disappearing
Almost one year has passed since the destruction of the Venezuelan stock market upon claims that some brokerage firms conducted illegal exchange operations without backup securities. Based on that, public prosecutors of the Attorney General Office raided companies and captured more than 10 people. Now, over 50 brokerage firms have been requisitioned or are in liquidation. Some others are returning their operation licenses. (El Universal, 05-11-2011;


Power outage hits Paraguaná refining complex
A power failure, presumably in the GENEVAPCA power plant, caused a power outage in the Paraguaná Refining Complex located in the state of Falcón, northwestern Venezuela. A source within the state-run oil company Petróleos de Venezuela (PDVSA) told Reuters that 310,000 bpd Cardón oil refinery was completely out of service, while some units of the 645,000 bpd Amuay oil refinery were also shut down due to the power failure. GENEVAPCA is a power plant aimed at providing power supply to PDVSA facilities in the city of Punto Fijo, Falcón state. However, prior to the the commissioning of the Josefa Camejo thermal power plant, GENEVAPCA supplied energy to the National Interconnected System (SIN). (El Universal,05-12-2011;

Venezuelan Energy and Oil Ministry guarantee fuel shipments from the Bajo Grande plant to supply most of the city of Maracaibo, are normal despite the power interruptions. Internal Market General Director Gladys Parada said the long lines in gas stations in Maracaibo are due to ill-intentioned comments in some social networks that have produced nervousness among consumers. (Veneconomy, 05-11-2011;


Chávez ponders cabinet reshuffle
President Hugo Chávez could be studying the possibility of a new cabinet reshuffle, "but he is waiting for the electoral outlook to become more clear in order to make some decisions," a source close to the Venezuelan Head of State said.
General Henry Rangel Silva, the Head of the Strategic Operational Command (SOC), would become new minister of Defense, while Vice President Elías Jaua and Minister of the Interior Tarek El Aissami would be candidates for governor or mayor. (El Universal, 05-11-2011;

US: Opposition gains popularity due to economic problems
Outgoing Assistant Secretary of State for Western Hemisphere Affairs (WHA) Arturo Valenzuela said on Wednesday that Hugo Chávez's administration faces economic troubles that have deteriorated the Venezuelan president's leading role in the Latin American region and increased popularity of the Venezuelan opposition. In a speech to businessmen and scholars, Valenzuela commented that "the situation is changing in Venezuela." According to the diplomat, "the government is facing serious problems; the economy is not doing well and the opposition ... is gaining new spaces. I think it is an important trend". (El Universal, 05-11-2011;

Cuba, Belarus, Brazil, Russia, and China maintain broadest cooperation with Venezuela
Cuba remained in 2010 as the main strategic partner of Venezuela, judging by the number of agreements signed by both countries, representing 38.7% of the Republic sealed the last year, according to the memory and the Foreign Ministry has handed National Assembly. The text said the government signed 733 agreements with 41 countries, of that total, 284 were with the President Raul Castro. The second country was Belarus, with 59 -8% of the total. Followed by Brazil with 7.6% 56 agreements. Russia is fourth with 52 7%. China closes the top five countries with more bilateral treaties signed in 2010, with 48 6.5% - in sectors such as energy, finance, electricity, mining, science and technology, industry, commerce, housing, agriculture and culture. Not signed any agreement with the United States. More information in Spanish. (El Nacional; 05-11-2011;

Energy ministers to debate integration and development in Caracas
Over 30 delegations will meet this Thursday in Caracas to hold the first encounter of energy ministers within the framework of the Latin American and Caribbean Summit on Integration and Development (CALC).
A press release from the Venezuelan Energy and Oil Ministry says the goal of the meeting is to consolidate the energy integration and the general development in the region. The meeting is part of the preparatory activities for the upcoming the CALC, which will take place in Venezuela next July 5-6, specifically in Margarita Island, reported a press release from Venezuela"s Foreign Ministry. (AVN, 05-12-2011;;

Venezuela, Colombia parliaments to strengthen relations
The parliaments of Venezuela and Colombia will create groups of friends made by deputies of each legislative body since next week, with the aim to strengthen relations, informed this Wednesday the chairman of Venezuela´s National Assembly, Deputy Fernando Soto Rojas. Soto Rojas said the creation of these group of friends to strengthen relations between the parliaments of the two countries was arranged during an encounter he held with Colombian Ambassador to Venezuela, Jose Fernando Bautista. (AVN, 05-11-2011;

Brazilian president to visit Caracas in July
Brazilian Foreign Minister Antonio Patriota has confirmed that President Dilma Rousseff is scheduled to visit Caracas on July 5 for the summit of the Community of Latin American and Caribbean States (Celac). The top Brazilian diplomat said that Rousseff confirmed attendance during a telephone conversation with her Venezuelan counterpart Hugo Chávez. The summit is to be held in Caracas on July 5 and 6, within the framework of the bicentennial of Venezuela's declaration of independence, according to a statement released by Venezuela's Foreign Ministry. (El Universal, 05-11-2011;

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.

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