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.

Tuesday, August 16, 2011

August 16th, 2011

Economics & Finance

Analysts: Pending price-control law could backfire, boosting inflation in Venezuela
Pending legislation aimed at curbing Venezuela’s soaring inflation could backfire by boosting consumer prices, spurring corruption, stemming investment and causing more severe shortages of basic goods, analysts warned on Saturday. Government officials and lawmakers loyal to President Hugo Chavez claim the Law for Fair Costs and Prices would help reduce Latin America’s highest rate of inflation by forcing businesses to set retail prices at rates established by government officials. Among the factors that officials would consider are production costs such as raw materials and labor. (The Washington Post, 08-13-2011;

Chávez promotes the SUCRE as a tool to shield the region from financial crisis
Though a phone call to a partisan event by his supporters, President Chávez said that the Unified Regional Compensation System (SUCRE) has potential as a tool to shield the region from the financial crisis caused by global economic meltdown in the U.S. and Europe. He added that launching a single currency would allow them to ignore the dictates of US currency. More in Spanish: (AVN, 08-15-2011;

PDVSA relies on nine special funds for parallel expenditures
Live the Venezuelan Government, the state-run oil holding Petróleos de Venezuela (PDVSA) also runs on a parallel budget through nine funds that support social welfare programs known as missions, as well as projects in agriculture, housing, infrastructure, industry and electric power. According to data supplied by the oil company, these special funds contributed over U$D 10 billion to social plans and production projects. (El Universal, 08-13-2011;

National Assembly has authorized added expenditures jointly funded by China
The National Assembly has authorized an additional credit for projects jointly financed with China, which also draw upon the existing Long Range High Volume U$D 20 billion fund. It approved a special U$D 2 billion operation to be used for acquiring products for the “My Well Equipped Home” program, installing a household appliance factory, purchasing transport aircraft, expanding the port at Puerto Cabello and seven agricultural plans. More in Spanish: (El Universal; 08-16-2011;

Polling firm DATANÁLISIS says 62.7% perceive food supply negatively
According to a perception study conducted by DATANÁLISIS, 62.7% of Venezuelans have a negative view about the availability of foodstuffs in their usual shopping areas. 37% have a positive view 0.3% did not know or had no answer. During June, the reports shows consumers consider it more difficult to find products vegetable oils, corn and soy, milk powder, and wheat flour. More in Spanish: (El Universal, 08-15-2011;

CADIVI cut foreign exchange allocations to commerce in half
According to CADIVI, the agency responsible for distributing dollars at the official exchange rate of 4.30 bolivars allocations to the commercial sector have dropped off  50% as compared to the first semester 2010, falling from U$D 1,51 billion to 772 million. Foreign currency authorizations to import machinery and equipment fell by 44%. More in Spanish: (El Universal, 08-15-2011;


Venezuela Oil Falls to U$D 103.45
Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending August 5 fell to U$D 103.45 from the previous week's U$D 107.84, but still raising the average for the year to U$D 99.43. (Latin American Herald Tribune, 08-15-2011;

Venezuelan oil production and exports decreased in June to 2.77 million bpd from 2.79 million bpd a month earlier, according to the Ministry of Energy. This is the second lowest monthly average so far this year. Of the total amount, Venezuela exported 2.41 million bpd, down from 2.48 million bpd in May due to fewer sales of byproducts. (Veneconomy, 08-11-2011;

PETROPIAR increases daily oil output to 160,000 Barrels
Petróleos de Venezuela SA, the state oil company, says it has increased daily production of heavy crude oil at its Petropiar unit to 160,000 barrels. PETROPIAR, a joint venture with CHEVRON Corp., had daily production of 155,000 barrels during the second quarter and the unit expects to end the year producing 169,000 barrels a day. PDVSA, as the company is known, said it plans to increase daily output to 175,000 barrels in 2012. (Bloomberg, 08-14-2011;

PDVSA shows mixed environmental record
Venezuela's state oil company PDVSA is reporting over 2,000 oil leaks in its 2010 management report, down from more than 8,100 the prior year. At the same time, Petróleos de Venezuela recorded 2,393 leaks of hydrocarbons and chemical products during 2010. From January to October 2009, the company recorded 8,124 such incidents. The company called the spills "undesirable events with an environmental impact" in its management report. The volume leaked was down from 182,000 barrels in 2009 to 121,000 barrels in 2010, a decline of more than 30%. (UPI, 08-12-2011;

Blackout in northwestern Venezuela due to failure in power plant
After disruptions in the Isiro-Planta Centro power lines, a major blackout took place in the state of Falcón (northwestern Venezuela) after a power generation failure. The outage also hit the Paraguaná peninsula, despite the fact that this region is supplied by the Josefa Camejo power plant. The blackout, due to a failure in Planta Centro power plant, hit the 25 municipalities of the Venezuelan state. (El Universal, 08-15-2011;

Logistics & Transport

Shipping freight costs to local ports
The shipping lines increased the cost of sea freight to Venezuela by 5%, according to a source close to the port activity, which reports carriers made the adjustment as a result of increased taxes and port charges that Bolivariana de Puertos (BOLIPUERTOS) began implementing in June. "It was to be expected with increased rates Bolipuertos," said the source consulted, adding that even before the adjustment freight shipping costs were more expensive than in other countries in the region. "Before the implementation of new port tariffs we had the most expensive costs in the region." More in Spanish: (El Universal, 08-15-2011;


Chavez returns from chemo recharged but cautious, seeks reelection with more votes than in 2004
President Hugo Chavez returned to Venezuela in the early hours of Sunday after undergoing a second round of chemotherapy in Cuba, sounding recharged and combative in a telephone conversation with state television. Chavez said he felt fewer side effects this time from the treatment and that his doctors will decide soon whether he needs a third session and also possibly radiation therapy. Seeking reelection, on Twitter he says; “Hey comrades, if we beat the opposition by 60% 7 years ago, in 2012 we must surpass this” (Reuters, 08-14-2011;; More in Spanish: El Universal; 08-16-2011;

Reuters: Chavez seeks to contain voter angst over economy
Venezuela's economy is plagued by shortages, high inflation and crippling currency controls, but a massive spending spree by President Hugo Chavez will likely keep an incipient recovery alive, at least until a 2012 vote. Polls show support for the charismatic leftist leader has edged up since he announced in June he had cancer. But unless he can generate as much sympathy for his economic stewardship, his re-election bid could be at risk. In the short term, Chavez can paper over underlying problems with subsidies, price controls and ramped-up spending on his flagship health and housing programs for the poor. (Reuters, 08-15-2011;

National Assembly will investigate opposition funding
The National Assembly will investigate alleged foreign financing of the opposition Democratic Unity Board (MUD). The move was proposed by the head of the pro-Government United Socialist Party, Cilia Flores; and supported by opposition Assembly members. The Executive Secretary of MUD, Ramón Guillermo Aveledo, says they can investigate the organization “as many times as they want” and that all their actions are public. He added: “They will not distract MUD from its true objective which is to continue building a solid unity and a proposal for all Venezuelans in 2012”. Chavez, upon returning from Cuba, requested the investigation “politically and legally”, and accused the opposition of “creating an atmosphere aimed at questioning” their possible defeat in 2012. More in Spanish: (El Universal; 08-16-2011;  and  El Universal, 08-16-2011;

Over 500,000 people migrated from Venezuela in 2010
A total of 521,000 Venezuelans sold their belongings, rented their houses, left the country with their scarce properties or migrated without any money in 2010. At the same time, over one million people migrated to the South American country, according to a report called "Migration and Remittances Factbook 2011" by the World Bank. The number of people emigrating accounts for 1.8% in a nation of h 29,322,327 inhabitants, according to demographic by the National Statistics Institute (INE). (El Universal, 08-15-2011;

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.

No comments:

Post a Comment