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, March 30, 2012

March 30, 2012

Economics & Finance

By degree, Chavez grants himself unlimited powers to spend and increase debt
Through a decree based on the Enabling Act, President Chavez has reformed the Basic Law on Public Sector Financial Management in order empower the President to create debts above and beyond limits set by the Annual Credit Law. The reform says additional debt can be created in "unforeseen circumstances, not planned or difficult to project", and the amount of these transactions will be added into the debt cap for the next fiscal year. It also authorizes the President to directly approve spending. Article 81 of the new decree says: "It will not be necessary to have authorization from the National Assembly nor take into account the opinion of the Central Bank". More in Spanish: (El Nacional, 03-30-2012;; El Universal;

Expert cites Venezuela as an example of misuse of oil revenue
Venezuela and Argentina are not implementing sound oil policies, cautioned Zimbabwean oil and gas expert Duncan Clarke. Speaking to Efe in Nairobi, where he presented his new book "Africa's future," Clarke said that "Venezuela, and particularly (President Hugo) Chávez is an example of misuse of the cash generated by oil and gas." The expert knows the energy situation in Latin America, where he has been an adviser to governments and companies. He is the chairman of Global Pacific & Partners, a natural resources consultancy group. (El Universal, 03-28-2012;

BARCLAY's says dollar denominated bond issues to increase to U$D 12 billion in 2012
A report by BARCLAYS Capital on Venezuelan government bonds says dollar denominated bond issues will increase over the next few months and projects operations for 2012 at U$D 12 billion. It reports that at least U$D 5 billion  will go to the SITME operation managed by the Central Bank in order to allocate foreign currency to the private sector in order to increase supplies and curb inflation. More in Spanish: (El Universal, 03-29-2012;

Statistics are in chaos in Venezuela, according to a report by TAL CUAL Daily, which reports on the substantial differences between figures supplied by international organizations and those provided by official agencies in Venezuela. More in Spanish: (Tal Cual, 03-30-2012;


Colombia's ECOPETROL to drill for oil In Venezuela
Colombia's largest company, state-controlled energy firm ECOPETROL SA, plans to drill for crude oil in neighboring Venezuela as the two countries continue to improve once-strained relations. Colombian Energy Minister Mauricio Cardenas announced the plans Wednesday after a meeting with his Venezuelan counterpart, Rafael Ramirez, in the coastal resort city of Cartagena. Cardenas said ECOPETROL will work alongside Venezuela's national oil company, Petróleos de Venezuela SA, or PDVSA, to revitalize already-developed oil fields in western Venezuela's oil-rich Lake Maracaibo. The joint venture is expected to produce somewhere between 40,000 and 100,000 barrels a day of crude oil. (Fox Business, 03-28-2012;; Bloomberg, 03-28-2012;

PDVSA is ending NYNAS partnership
Venezuela is selling its stake in a refinery project with Finland's Neste Oil that operates facilities in Sweden and Britain, according to Energy Minister Rafael Ramírez in comments published on Friday. Venezuela's state oil company PDVSA and Neste Oil are 50-50 partners in Nynas AB, which runs four refineries with a combined capacity of 67,000 barrels per day. The planned sale will leave PDVSA without any downstream refinery assets in Europe. (Diplodemocracia, 03-20-2012;

SIDOR in the red U$D 358 million during 2011
State-run steelmaker Siderúrgica del Orinoco (Sidor) reported U$D 358 million losses in 2011, despite rising production and sales. In 2010, the steel mill had reported profits amounting to U$D 57 million. Venezuela's main steelmaker reported a positive operating income (gross sales and net sales of goods) amounting to VEB 6.43 billion (U$D 1.49 billion), while the cost of sales of goods and services was U$D 1.57 billion translated into a negative balance of U$D 80 million. (El Universal, 03-28-2012;

SMURFIT land takeover endangers supply of packaging for foodstuff
With 42% of SMURFIT owned land taken over by the government, company workers fear lumber supply from 7,000 plus hectares - which produce around 200,000 tons of wood - could severely hit the manufacture of packing materials. SMURFIT says around 53% of its production goes to the food industry, all of which could lead to a deficit in agribusiness. More in Spanish: (El Mundo; 03-13-2012;


Chavez back after radiation therapy, facing elections on October 7th
President Hugo Chavez returned home to Venezuela on Thursday after a first session of radiation treatment in Cuba that he hopes will cure his cancer and allows him to win a new six-year term in October. Very little is known about Chavez's condition - he has had three cancer operations in less than a year - so doubts remain about the future of the man who has dominated politics in South America's biggest oil exporter for the last 13 years. He said he expected to return to Cuba on Saturday to resume the radiation treatment, and to stay there for four more days.  Separately on Thursday, Venezuela's national electoral authority confirmed October 7 as the election date - squashing rumors that the poll might be brought forward, or delayed, due to Chavez's cancer treatment. (Reuters, 03-29-2012;; The Washington Post, 03-29-2012;; AVN, 03-29-2012;

Chavez threatens banks, private business for supporting his opponents
President Hugo Chávez says he has information on alleged opposition plans to destabilize the country and threatened some banks and private companies with nationalization if they support his opponents. He said he is drawing up a list of actions to take in case the opposition takes it upon itself to "attach the people". More in Spanish: (El Nacional, 03-30-2012;

Latin America Security: Venezuela Worse, Panama Safer
Venezuela, along with Haiti and three Central American countries, is getting more dangerous for foreign multinational executives, according to the sixth annual Latin Security Index developed by FTI Consulting Ibero America for Latin Business Chronicle. Meanwhile, Panama has seen an improvement. Overall, security for multinational executives in Latin America has worsened slightly the past year, the index shows. 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. (Latin Business Chronicle, 03-28-2012;

Caracas: “A War Zone”
In Venezuela these days, no one is safe, especially local and foreign business people. “Caracas is the most dangerous capital city in the world, more dangerous than Baghdad,” says Roberto Briceño Leon, who heads the Observatorio Venezolano de Violencia, a non-government watchdog that monitors crime in the country. (Latin Business Chronicle, 03-28-2012;

Chavez objects to US government statement to travelers about crime in Venezuela
President Hugo Chavez is taking issue with the U.S. State Department for posting a statement advising travelers to beware of rampant violent crime in his country. Chavez said that the South American country’s security situation ought to be compared to that of the United States. “Where would there be greater lack of public security on the streets? In Venezuela or in the United States?” Chavez said. “Let’s look at the figures.” (The Washington Post, 03-27-2012;

Chávez, 44%; Capriles Radonsky, 31%
President Hugo Chávez has a 13-pecentage point lead over his challenger Henrique Capriles Radonski, the candidate of Venezuelan opposition umbrella group Unified Democratic Panel (MUD), according to the latest opinion poll released by polling firm DATANÁLISIS. As per the poll conducted in March, 44% of voters favor Chávez compared to 31% for Capriles, amid a war of figures that broke out in the media following opposition primary election held in February. According to DATANALISIS Director Luis Vicente León, although Chavez's cancer impacts his image and creates uncertainty among his supporters, it also overshadowed the "political impact of opposition primaries". (El Universal, 03-27-2012; and more in Spanish: El Universal, 03-30-2012;

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