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, June 24, 2011

June 23th, 2011

Economics & Finance

PDVSA planning U$D1.5 billion bond offering to repay Venezuelan Central Bank
Petróleos de Venezuela SA will sell U$D1.5 billion of bonds to the central bank to repay a loan and will likely sell additional securities in the second half of the year, a government official said. PDVSA, as the state oil company is known, within a month plans to issue more of its bonds due in 2022 that were first sold in February, the official, who asked not to be identified because he isn’t authorized to speak publicly on the matter, told reporters. (Bloomberg, 06-23-2011;

Overnight banking rates sink toward zero as Gov’t pushes to spur lending
Venezuela’s overnight bank lending rate fell to the lowest since 2008 as President Hugo Chavez’s push to boost bank lending swelled the amount of cash in the financial system. The rate at which banks lend to each other declined to an average of 0.09% today from 0.1% yesterday, said an official at the central bank, who asked not to be identified because he isn’t authorized to speak publicly. That’s the lowest level since June 20, 2008. The rate has fallen for 8 consecutive days from 10.5% on June 9. (Bloomberg, 06-21-2011;

Gold is now 60% of reserves
The balance sheet published by the Central Bank at the end of May shows that 60% of reserves is invested in gold.
A report published in May this year ECOANALÍTICA addresses the issue of investments in gold and notes that "it seems extremely high ratio of international reserves that the central bank remains in this metal. Today we can say that not only are vulnerable to oil prices, but also the fluctuations in the price of gold."It adds that the revaluation of this metal in recent months has allowed cushion the fall in international reserves and exchange profits and inflate the operation of the BCV to deliver to the Treasury. More information in Spanish. (El Universal; 06-23-2011;

BCV to increase supply of foreign exchange through SITME
Venezuela's Central Bank to raise the supply of foreign exchange through SITME system, securities transactions in foreign currency, in order to cover some of the unmet demand for some imports. A source close to the Ministry of Planning and Finance said the central bank has a sufficient bond portfolio from Petróleos de Venezuela and the Republic. More information in Spanish. (El Nacional; 06-23-2011;

Ministry imposes fines of up to 320% on industry and commerce for electric consumption
The Ministries of Electricity and Information and Communication published the incentives and penalties on residential and corporate rates. For industrial, commercial or official users it provides fine ranging from 9% to 320%, with intermediate rates of 20%, 46%, 80% and 200%. More information in Spanish. (El Nacional;

Venezuela's business criticizes steps taken in power crisis
Noel Álvarez, the president of the Venezuelan Federation of Trade and Industry Chambers (FEDECÁMARAS) is afraid that the government is not taking the "appropriate measures" to resolve the power crisis. He said that rather than "consumer demand," the main problem is "power demand." Álvarez said the collection of fines levied against companies that fail to reduce their power demand is an "indirect" increase of power rates. (El Universal, 06-22-2011;

16 State companies considered not sustainable
A study carried out by IESA researchers show that the way these companies –most of them expropriated- operate is not sustainable since they follow political criteria and not profit generation. The lack of funds has forced them to depend on government subsidies which have reduced incentives for employees and productivity. (Veneconomy, 06-22-2011;

Venezuela moves to expropriate MATESI
TENARIS S.A. announced that the Venezuelan National Assembly passed a law declaring all MATESI assets of public and social interest and ordered the expropriation of assets required for a state-owned project for the production, sale and distribution of briquettes, and will start negotiations for the acquisition of said assets. (Finance Yahoo, 06-22-2011;

Sucre operations said to reach U$D 375 million
Authorities claim that transactions have increased in the region despite obstacles encountered in the Unitary System Regional Payments (Sucre), which caused a first meeting of Authorized Operating Banks at the Central Bank of Venezuela (BCV). "The Sucre is a virtual currency for central banks such as the Ecuadorian exporter is paid in dollars, legal currency in this country and the exporter Venezuelan bolívar was canceled. The Venezuelan importer buying its currency and the importing Ecuador well. Each uses its national currency," said the president of Banco Central del Ecuador, Diego Borja. More information in Spanish. (El Mundo, 06-22-2011;$375-millones-.aspx)


Venezuela claims oil output reaches 2.8 million bpd
Venezuela's oil production rose slightly to 2.82 million barrels per day (bpd) in April from 2.8 million bpd in March, according to the Ministry of Energy and Petroleum, which said that exports of crude oil and products amounted to 2.56 million bpd in May, compared to 2.22 million bpd in April. Rafael Ramírez, Minister of Energy and Petroleum and president of state-run oil company Petróleos de Venezuela (PDVSA), said recently that Venezuela would increase oil output by 50,000 bpd in 2011. (El Universal, 06-21-2011;

RUSORO requests flexibility on profit repatriations
RUSORO, the Russian firm aiming to exploit Las Cristinas mine, has asked the Government to be more flexible on obstacles to profits repatriation. At present only 30% of foreign exchange earned from exports can be repatriated. More information in Spanish. (El Nacional; 06-22-2011;

Government imports up to 25,000 tons of beef per month
Imports come from countries such as Argentina, Uruguay, Brazil and Colombia, or from as far away as New Zealand, Mexico or the United States. South America continues to top the list as 80% is imported directly from Caracas through CASA and BARIVEN, and the remaining 20% goes through private importers. According to the CENDA economic analysis unit, Venezuelans paid 32% more to buy meat and meat products last year, a category that covers 16% of household expenditure on food. More information in Spanish. (El Carabobeño; 06-22-2011; and El Mundo,

Logistics & Transport

Port services may increase at least by 53%
The new pricing structure for port services is an increase of at least 53% of the costs of port operations, according to calculations by the Chamber of Commerce of Puerto Cabello (JPAC). "Not only is this rate adjustment confusing in its wording, it also increase overall port costs at least 53% the rate of 4.30, not counting the increases that will occur in the freight and any surcharges further, "said the JPAC press release. On the contrary, Elsa Gutierrez Graffe, BOLIPUERTOS President, claims the new rates are an average decrease of 54.02%. More information in Spanish. (El Mundo, 06-22-2011;


Details scarce on Chavez's condition after surgery
Most reports sum up Hugo Chavez's medical condition in a few words. Official accounts repeatedly say Venezuelan leader is "recuperating satisfactorily". Chavez has not updated his Twitter page or appeared on live television. His absence from Venezuela has sparked debate and speculation. In a Wednesday interview Barinas State Governor Adán Chávez, said: “We don't know exactly when he will return. We have to wait for the doctors' evaluation. But In a few days, 10 days, 12 days, the president will be here". (CNN, 06-23-2011;

Chavez's silence gets Venezuela talking
Venezuela is abuzz these days over the condition of Hugo Chavez -- whose prolonged, uncharacteristic silence and convalescence in Cuba has generated all manner of rumor. No interviews, no broadcast tirades, and no Twitter postings for two weeks have fuelled speculation across online social networks and in bars and cafes. Officials have tried to be reassuring, saying 56-year-old Chavez was recovering well and was continuing to give orders from Cuba."It's all very dark, opaque and mysterious," says Ignacio Avalos, a sociology professor at the Central University of Venezuela. But in the legislature, a fierce debate is raging over whether Chavez has the right to rule from abroad. The minority opposition is demanding more transparency. (AFP, 06-22-2011;

Five out of 10 Venezuelans support a change of government
Five out of 10 Venezuelans reject the government's argument suggesting that obstacles have been set to prevent Hugo Chávez from fulfilling his obligations. According to the second quarter's public opinion survey conducted by pollster Alfredo Keller & Asociados, only three out of 10 citizens deem it true that "the opposition does not let Chávez work." The Venezuelan pollster examined people's support for the Head of State and found that four out of 10 people retain hope and enthusiasm for Chávez, whereas five out of 10 have become disillusioned with the President or have become a permanent critic of his work. (El Universal, 06-22-2011;

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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