March 09, 2012

Economics & Finance

Central Bank says there will be no devaluation this year, increases foreign currency flow to public

Nelson Merentes, President of the Central Bank has said there will be no devaluation this year, but added that this is something that depends on “economic dynamics”, adding that the Government is trying to “closet he gap between the official exchange rate and the unofficial ones”. Merentes made his statements during a CNN interview. At the same time and in order to stem inflation, it has increased the supply of foreign currency supply through the System for Transactions in Foreign-Currency Denominated Securities (SITME) to expedite imports and to steady the supply of goods. SITME provides State or Pdvsa-issued US dollar-denominated bonds in bolivars in order to resell them abroad and obtain US dollars at an exchange rate of VEB 5.30. From January 1 to March 6h, companies purchased bonds on the order of U$D 1.72 billion from SITME, an amount 31% higher than in the same period of 2011. When the bonds are sold abroad, companies must absorb a discount on price of these securities. (El Universal, 03-08-2012; http://www.eluniversal.com/economia/120308/central-bank-of-venezuela-boosts-foreign-currency-supply; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/merentes-descarta-devaluacion-este-ano.aspx)

Frozen corporate dividend repatriation mounts to around U$D 9.436 billion

The ECOANALITICA economic analysis firm reports that international companies operating in Venezuela have a dividend repatriation backlog of some U$D 9.436 billion due to processing delays at Venezuela’s Currency Board (CADIVI). The figure includes both official requests pending with CADIVI and those that have not yet been registered because the exchange authority will not accept additional requests until previous ones have been adjudicated. More in Spanish: (El Universal, 03-09-2012; http://www.eluniversal.com/economia/120309/crece-deuda-de-cadivi-por-repatriacion-de-dividendos)

Investment climate is seriously deteriorated

Carlos Tejera, general manager of the Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM), says that investment climate has seriously deteriorated in Venezuela."It is obvious that foreign investor perception about Venezuela's country risk is high. It is evident that according to academic and objective criteria there is a bad assessment about our country's risk and the rule of law in Venezuela," Tejera noted. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venamcham-venezuelas-investment-climate-has-seriously-deteriorated)

Special funds managed by the Executive estimated around U$D 52 billion

Special – not budgeted - funds managed by the Government have continued to increase. According to the ECOANALITICA firm, by the close of January they were up to U$D 52 billion, an increase of 52.8% over last January year. More in Spanish: (El Nacional, 03-09-2012; http://www.el-nacional.com/)

Inflation decreased 1.1% in February

The National Consumer Price Index (CPI) registered an inter-monthly variation of 1.1%, according to the monthly report published jointly by the Venezuelan Central Bank (BCV) and the National Statistics Institute (INE). The monthly report highlights that it is a positive indicator, as it has been falling for three consecutive months and "it is the lowest value registered since January 2008." (AVN, 03-06-2012; http://www.avn.info.ve/node/102128; El Universal, http://www.eluniversal.com/economia/120306/inflation-hits-the-lowest-month-to-month-increase-since-january-2008)

Commodities

ECOANALITICA estimates PDVSA loses around U$D 6.8 billion a year in China operations

According to the ECOANALITICA firm around U$D 3.5-5 billion are discounted from the price of oil shipments in order to amortize loans from China, and also makes interest payments around U$D 1.8 on bonds issued, which hinders its ability to fund the special investment plan. More in Spanish: (El Nacional, 03-09-2012; http://www.el-nacional.com/)

PDVSA, Chevron ready U$D 2 bln oil project credit

State oil company PDVSA and U.S. oil major Chevron are readying a U$D 2 billion credit to expand oil production at the PETROBOSCAN joint project, sources close to the operation said on Tuesday. "The conditions for the credit have already been negotiated. The U$D2 billion will be loaned by Chevron's headquarters," said one of the sources who were not authorized to speak on the record about the deal. PETROBOSCAN, in western Venezuela, now produces 115,000 barrels per day of crude and is 60% controlled by PSVSA and 40% owned by Chevron. (Reuters, 03-06-2012; http://www.reuters.com/article/2012/03/06/venezuela-oil-idUSL2E8E6D5R20120306)

PDVSA to trade bonds in the Hong Kong Stock Exchange which would expand its markets says Oil and Mining Minister Rafael Ramírez. He also said State oil company is not planning to sell part of its shares. Ramírez did not detail amounts or the time in which PDVSA would concrete the registration in the market and he also discarded a short-term securities issuance. (Veneconomy, 03-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29714&idc=4)

Government expects to produce 8.3 million tons of cement in 2012

Raúl Pacheco, Vice Minister of Productivity Management, predicts the Executive will to produce 8.3 million tons of cement in 2012 to further strengthen the country's infrastructure, as well as the housing construction program. He says that cement production was 7.77 million tons in 2011. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuelan-govt-to-produce-83-million-tons-of-cement-in-2012)

Steelmaker stopped production of 14,000 tons of rebars

The production steel bars in state-run steelmaker Siderúrgica del Orinoco (SIDOR) was stopped for two weeks, which hit the manufacture of rebars essential to meet goals within the government’s housing program. Operations started up again Monday. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuelan-steelmaker-stopped-producing-14000-tons-of-rebars)

Government regulates fuel sales in Venezuela's border states

The Ministry of Petroleum and Mining published rules for "setting up, operating and regulating" a system for fuel sales in Venezuela's border states. Users must register with the Control System for Fuel Supply (SISCCOMBF) in order to receive a tag or electronic identification, which is essential to buy fuel under government regulations.  Rules define five types of users, namely "end-users, residents, tourists, travelers, and emergency users." End-users who are not registered with SISCCOMBF will only be allowed to buy fuel up to three times. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/government-regulates-fuel-sales-in-venezuelas-border-states)

Harvest shares surge on Venezuela divestment plan

Harvest Natural Resources Inc. (HNR) climbed the most in four years after announcing it’s in exclusive talks to sell assets in Venezuela. Harvest rose 23% to U$D 7.70 at the close in New York, the biggest gain since June 18, 2007. The Houston-based oil producer is in exclusive talks to sell its 32% stake in the PETRODELTA joint venture in Venezuela, it said. “While no dollar amounts were provided, news of an imminent sale has nonetheless put a charge into shares today,” Chad Mabry, senior oil and gas analyst at Rodman & Renshaw LLC in Houston, said today in an e-mailed note to clients. (Bloomberg, 03-06-2012; http://www.bloomberg.com/news/2012-03-06/harvest-shares-surge-on-venezuela-divestment-plan-caracas-mover.html; El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/harvest-natural-seeks-to-sell-stake-in-petrodelta)

Power failure hits Andean region and Barinas

The Andean states of Trujillo and Mérida, and Barinas (plains) have been hit by power rationing due to an outage occurred last weekend at the José Antonio Páez hydroelectric power plant. As a result, generating units 3 and 4 and one of the transformers were left out of service. According to an unofficial report, a load of 70 megawatts has not been supplied during peak hours in several Andean and plains towns: Trujillo (30 MW), Mérida (10 MW) and Barinas (30 MW). (El Universal, 03-08-2012; http://www.eluniversal.com/economia/120308/power-failure-hits-andean-region-and-barinas)

Logistics & Transport

Venezuela’s tax authority (SENIAT) unifies criteria with customs agents in Vargas state to begin data transmission via the SIDUNEA World technological platform, scheduled for next month and which is expected to expedite operations. SENIAT is considering an expansion of this system customs operation at Guanta and Puerto La Cruz, in Anzoátegui, and Valencia, in Carabobo. (Veneconomy, 03-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29721&idc=2)

Politics

Chávez tells Santos he will return home next week, approves trade agreement

Colombian President Juan Manuel Santos met Wednesday afternoon with his President Chávez in Havana, Cuba, and reports that the Venezuelan Head of State told him that he plans to return to Venezuela early next week, after he underwent a surgery to remove a cancerous tumor. "We found him in good health condition, happy and in good spirits. He told me his recovery is going well." Santos spoke at the end of a short visit to Cuba. Both presidents discussed issues related to the Colombia-Venezuela bilateral trade agreement. "We had not given a green light to the annexes that our ministers and experts discussed for the trade agreement with Venezuela to take effect. We have given the green light and all we have left is the signing of the annexes by the foreign ministers. In order to save time, we are going to draft the corresponding decrees and take the steps for the agreements to take full effect as soon as possible," the Colombian leader added. (El Universal, 03-08-2012; http://www.eluniversal.com/nacional-y-politica/120308/chavez-tells-santos-he-will-return-home-next-week)

Journalist in eye of Chavez cancer storm

Derided as a "liar" and "clown" by President Hugo Chavez's allies, a bespectacled 66-year-old journalist has defied the verbal barrage to become a must-read for anyone tracking the Venezuelan leader's cancer. Veteran reporter and columnist Nelson Bocaranda broke the stunning news in mid-2011 that Chavez, the country's all-dominant socialist leader, and has garnered more than 670,000 followers via his two Twitter accounts - @NelsonBocaranda and @RunRunesWeb. Bocaranda says he has sources around the region, from Cuba and Colombia to Brazil and the United States, and protects them with personal meetings, constant changes of phone chips and the use of Blackberry messenger chat among other techniques. That prominence has made him a hate figure for Chavez supporters, and he does have serious concerns for his safety. He warned in a column this week that the state would be responsible for anything that happens to him or his family. (Chicago Tribune, 03-08-2012; http://www.chicagotribune.com/news/sns-rt-us-venezuela-chavez-journalistbre8270td-20120308,0,777161.story)

Venezuela readies third diesel fuel shipment to Syria

Venezuela is readying a new shipment of diesel to Damascus as part of a supply agreement signed by both governments in 2010. The Chávez's administration plans to continue meet the agreement despite the troubled political situation in the Middle East country, according to a pro-government legislator.  State-run oil company Petroleos de Venezuela (PDVSA) delivered a cargo of low-sulfur diesel in February aboard the Negra Hipólita tanker, a Venezuelan vessel operated by a PDVSA subsidiary. According to sources, it was the second fuel cargo shipped from the Venezuelan refinery of Puerto La Cruz. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuela-prepares-third-shipment-of-diesel-fuel-to-syria)

US Southern Command to remain vigilant

During a hearing before the Armed Forces Committee in the House of Representatives, Southern Command chief General Douglas Fraser said they were attentive to the “geopolitical turmoil” that may originate in Cuba, Venezuela, Bolivia and Haiti. As to Venezuela, General Fraser pointed out the country faces “uncertainty over President Chávez’ health,” a “persistent economic instability and growing violence levels that generate more demands from the government.” (Veneconomy, 03-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29683&idc=1)

Caracas to host Sao Paulo Forum

PSUV party International Affairs coordinator Rodrigo Cabezas has announced that the 18th Sao Paulo Forum will be held in Caracas, with 40 countries in attendance from July 4 to July 6 and the formal opening would be on July 5 to celebrate Venezuelan Independence Day. (Veneconomy, 03-06-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29681&idc=1)

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.