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, April 27, 2012

April 27, 2012

Economics & Finance

Washington Post: Chavez’s mysterious ailment fuels a run on Venezuelan stocks
What is the hottest global market so far in 2012? How about socialist Venezuela — where stocks rose 99% between Jan. 1 and this week. That might seem like an improbable surge in a country wracked by double-digit inflation, shortages of water, power and staple foods, and a dearth of investment — not to mention one of the world’s highest murder rates. But Venezuela’s markets are being moved by a strange but powerful force: the absence of reliable information about the health of President Hugo Chavez — and the growing speculation that his condition is rapidly deteriorating. According to Russell M. Dallen Jr., a banker who produces a newsletter on Venezuela, a rumor that a prominent journalist had tweeted the news of Mr. Chavez’s death caused Venezuelan bond prices to spike by as much as 5% Friday. (Washington Post, 04-24-2012;

Barclays: Signs of Chavez deterioration
BARCLAY's Emerging Markets Research publication for Monday, April 23 dissects information on the health of President Hugo Chavez, its political implications and possible effects on the economy. "Venezuela: President signs of impairment" refers to the recent absence of the Chief of State for over a week which. along with the shift of forces within the government, "increases the likelihood that Chavez continues to have severe limitations to continue and finish their campaign to designate a successor." More in Spanish: (El Universal, 04-25-2012;

World  Bank indicates Venezuela squanders oil boom
Rodrigo Chaves, World Bank director for Poverty Reduction and Economic Management in Latin America and the Caribbean says that whereas countries like Brazil, Colombia, Peru, Chile and Mexico "have managed well the supercycle" of raw materials, others "have squandered the boom, causing permanent damage to their economies." In his view, should there be a slowdown in China and a fall in raw materials, "there will be countries that have very high fiscal reserves, such as Peru and Chile," and others like Venezuela, which have a deficit "will suffer dramatically, because, like Aesop's grasshopper, they spent the summer singing." More in Spanish: (El Universal, 04-25-2012;

CITI forecasts that PDVSA will issue bonds soon
In a report dated April 24, US banking giant Citigroup said that it is highly likely that state-run oil company Petróleos de Venezuela (PDVSA) will issue bonds next month that will be purchased by the Central Bank of Venezuela (BCV) and other state-run financial institutions. These bonds will eventually feed the System for Foreign Currency Denominated Securities Transactions (SITME), a system through which companies buy US dollar-denominated bonds with bolivars and then resell them abroad to obtain US dollars. (El Universal, 04-25-2012;

Venezuela in the last places of competitiveness in Latin America
Venezuela is ranked second lowest in a study of competitiveness in Latin America by the Aden 0international business school..Chile and Panama topped the index every six months. Chile scored 81.4 points out of a maximum of 100 vs. 82.9 the previous measurement (November 2011) and Panama managed 76 points, up from 76.5 the previous semester. Venezuela is the second lowest in the region with 57.7 points, just ahead of Bolivia which recorded 54.9 points. More in Spanish: (El Mundo, 04-26-2012;

BCV: Retail sales drop 1.37% in January
Sales remain sluggish despite public spending to boost consumption in an election year.  According to data released by the Central Bank of Venezuela (BCV), both wholesale and retail sales grew 1.76% in January, compared to a 3.87% increase in the first month of 2011. Only retail sales posted a 1.37% decline in the first month of the year. (El Universal, 04-25-2012;

CADIVI lowers allocation of currency by 14%
The first quarter of 2012 reflects a drop in allocation of foreign currency, despite government assurances that the supply of foreign currency for price-controlled items will improve. An ECONOANALITICA report shows uneven currency distribution by the currency board, with a decrease of 37% and 39% for the health and automotive sectors; and increases of 64% for food, and 40% for general trade. More in Spanish: (Tal Cual, 04-27-2012;

Minimum wage increase now official
A presidential decree fixed a mandatory 30% monthly minimum wage increase for workers in the private and public sectors. The increase is scheduled in two 15% parts, one in May and the other in September. More in Spanish: (Tal Cual, 04-26-2012;


PDVSA eyes exports to India
As China shows signs of a slowdown in oil and fuel consumption, PDVSA is looking to India to take up the slack. Dispatches to India in the first two months of 2012 indicate that shipments to that country could balance or surpass supplies to China. More in Spanish: (El Nacional, 04-26-2012;

Japan grants U$D 1 billion in loans to PDVSA for oil projects
A new financing of 1 billion dollars have been granted by Japan to the Venezuelan state-oil company PDVSA, through the Japan Bank for International Cooperation.  The agreement was signed by Venezuela's Petroleum and Mining minister, Rafael Ramirez, and Japanese Economy, Commerce and Industry minister, Yukio Edano in Tokyo. (AVN, 04-25-2012;; El Universal, 04-25-2012;

Venezuela resumes nationwide power-rationing
Venezuelans residing in the central, western, southern and eastern regions of the country complain through social networks about the lack of electricity. They assume that partial power outages have been implemented or power failures are hitting their regions again due to faulty power distribution and transmission networks. But beyond that, the government is implementing a nationwide "scheduled and rotating power rationing plan." (El Universal, 04-25-2012;

Venezuela opposes increase in OPEC output target
Energy minister Rafael Ramirez says OPEC should not raise production targets when it meets in June. "We are against it, I think there is plenty of oil available in the market," he responded when asked whether he was in favor of increasing targets. "We think the oil price should be at a minimum $100 (a barrel). The reason the price is up now is because the market is reacting very nervously to the European economic crisis and the disturbing moves in the Middle East." (Reuters, 04-24-2012;

Venezuela iron ore output up 6% in Q1 - paper
Venezuela increased iron ore production by 6% in the first quarter of 2012 to its highest level in five years, the president of the country's primary iron producer Ferrominera Orinoco said. Iron ore output rose to 4.27 million tons in the first three months of this year, compared with 4.03 million tons in the same period of 2011, Radwan Sabbagh said in an interview published on Tuesday by the state newspaper Correo del Orinoco. (Reuters, 04-24-2012;

Sugar supply guaranteed
The head of the Venezuelan Foods Corporation Henry Silva emphasized that as part of the National Sugar Plan there will be no price increase of the food staple this year that according to it, its current price is far for the whole of the productive chain. Also, he guaranteed there is enough stock of the product for the country’s demand. (Veneconomy, 04-25-2012;

International Trade

South Korea plans for U$D 11.14 billion projects in Venezuela
South Korea and Venezuela have signed non-binding agreements for five heavy industry projects estimated at U$D 11.14 billion. According to Korea’s Knowledge Economy Ministry an U$D 8.8 billion crude oil project, involving PDVSA and a group including DAEWOO Engineering & Construction Co., will build a pipeline linking the Orinoco oil fields in the Junín area southwest of Caracas the capital to oil storage tanks and a harbor to be built in the coastal area of Araya. PDVSA and HYUNDAI Engineering & Construction Co. plan to build a U$D 1 billion, 900-megawatt petroleum coke-fired power plant in Carabobo, and a U$D 800 million refinery capable of processing 60,000 barrels a day in Junín. PDVSA will also build a U$D 500 million heavy oil storage facility with SK Engineering & Construction Co. PEQUIVEN and SK Engineering will construct a U$D 35 million petrochemical plant with a capacity to produce 800,000 tons of ethylene and other products a year, the ministry said. (Bloomberg, 04-24-2012;


Chavez returns ailing; still ahead in polls
President Hugo Chávez arrived early on Thursday in Venezuela, after spending 12 days in Cuba, where he underwent a fourth cycle of radiotherapy sessions to treat an undisclosed form of cancer. His failure to make his usual rounds on television and radio sparked speculation that his health had taken a turn for the worse and that he might have even died. But Chavez’s health problems don’t seem to be hurting his presidential aspirations. A series of recent polls show that the 57-year-old leader is still ahead of his rival Henrique Capriles, even as he’s been running his campaign from a Cuban hospital ward. “A key to understanding this phenomenon is that most people don’t think he is very sick,” said John Magdaleno, with the Polity political consulting firm in Caracas. “They recognize that he’s ill but they believe he will be able to compete in the race.”  (El Universal, 04-26-2012;; The Miami Herald,<9

Prepare scenarios with Chavez, without him, or a suspension of elections; Chavez calls for unity
At a meeting of the group that issues guidelines for regional election campaigns, Wilmer Castro, who coordinates the unit for planning and evaluation presented three scenarios for the next 5 months leading to the October 7th elections: "With a weakened Chavez, without Chavez, and the suspension of the elections due to the political climate". Higher PSUV officials later disavowed the presentation by Castro and ordered cadres to present Chavez in campaign mode and the opposition plotting violence to suspend the elections. In a telephone call, Chavez himself called to followers to promote "national unity to defeat opposition psychological warfare". (El Nacional, 04-25-2012;, More in Spanish: Agencia Venezolana de Noticias;ávez-convocó-unidad-nacional-para-derrocar-guerra-psicológica-oposición; El Universal,

Colombia's former President Alvaro Uribe will campaign along the border against a Chavez reelection, and has called Venezuela a haven for Colombian terrorists and drug trafficking. More in Spanish: (El Nacional, 04-27-2012;

US supports OAS sending observers to Venezuela's elections
Roberta Jacobson, Assistant Secretary of State for the Western Hemisphere told the Latin America Subcommittee of the House Foreign Affairs Committee that the US would roundly support the OAS sending observers to the October Presidential elections in Venezuela, but cautioned that in order to do so the OAS must receive a request from the Venezuelan Government. More in Spanish: (El Nacional, 04-27-2012;

Greater Caracas reported as the third most violent area in the world
Mexican NGO Citizens Council for Public Safety (CCSP) has published a report showing the 50 most violent areas in the world during 2011. According to this report, the Greater Caracas area was the third most violent in the world with 2215 homicides. This was 105.31 homicides per 100,000 populations. Only the Cortés and Yoro areas of Honduras are ahead in violence. More in Spanish: (El Universal, 04-27-2012;

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.

Tuesday, April 24, 2012

April 24, 2012

Economics & Finance

Amid food shortages, some blame price controls
Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here. The shortages hit both the poor and the well-off, in surprising ways. The heart government imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor, and these are often the very products that are the hardest to find. Prices are set so low that companies and producers cannot make a profit. So farmers grow less food, manufacturers cut back production and retailers stock less inventory. Moreover, some of the shortages are in industries, like dairy and coffee, where the government has seized private companies and is now running them, saying it is in the national interest. (The New York Times, 04-21-2012;


PDVSA: U$D 16 billion disbursed in interest payments since 2007
According to reports by the KPMG auditing firm, PDVSA's financial debt grew 1097% over the past five years, leading to high interest payments by the company. Audit reports show PDVSA disbursed U$D 16 billion for interest payments between 2007 and 2011. The report shows that in 2011 figures disclosed include devaluation costs, foreign currency sales to the Central Bank and assets transferred to government companies such as PDVAL. More in Spanish: (El Nacional;

... and reported profits up due to sale of Germany-based refinery
PDVSA 2011 financial and operating results show the net profits of the state-owned oil company rose 42%, from U$D 3.14 billion to U$D 4.49 billion last year. However, PDVSA's financial statements show that the increase in the state-run oil company profits was due to the sale of PDVSA's shares in the four Ruhr Oel GmgH refineries in Germany, which were sold to Russian company ROSNEFT in October 2010, and to increasing oil prices. (El Universal, 04-21-2012;
... and the company meets 96% of oil export goals to China
PDVSA, which is committed to pay the loans made to Venezuela under the Chinese Fund, has shipped oil and oil products to China since 2007 at market prices. Based on data released last week by the state-owned oil company, Venezuela has achieved 96% of the oil export goals set under the agreements signed with Chinese authorities. (El Universal, 04-23-2012;

CNPC, PDVSA to start building joint refinery in late April
State-run China National Petroleum Corp (CNPC) and Petróleos de Venezuela SA (PDVSA) will start building their mega joint refinery on China's southern coast later this month, a move would pave the way for more Venezuelan oil to flow to the world's second-largest oil user. CNPC, which operates key businesses via PetroChina, has been preparing for a formal construction kickoff of the 400,000 barrels-per-day (bpd) Jieyang plant in the coming weekend, two company officials said. (Reuters, 04-23-2012;

Vietnam, Venezuela begin tapping a new oil field
A Vietnam-Venezuela oil and gas joint venture has begun production at a new field in the Orinoco region with an initial output of 50,000 barrels per day (bpd), the Vietnamese government said on Thursday. The venture, PETROMACAREO, would raise extra heavy crude oil output from the field in Junin 2 block to 200,000 bpd by 2015, the government said in a statement. (Reuters, 04-19-2012;

Iran to deliver oil tanker to Venezuela by September, Mehr says
Iran Marine Industrial Co. has completed two-thirds of an oil tanker ordered by Venezuela’s state oil company and will be delivering the vessel by late September, Mehr reported, citing, managing director of the Iranian company Mehdi Etesam. PDVSA signed a contract with the Iranian company, known as Sadra, for the construction of four Aframax tankers, each capable of carrying 113,000 tons of crude oil, Etesam said, according to a report by the state-run news agency published yesterday. The vessels will each cost about $52 million and delivery time will depend on the financing, he said. (Bloomberg, 04-23-2012;

International Trade

Spain to dispatch seventh ship to Venezuela on Monday
Next Monday, Spanish company NAVANTIA will dispatch to Venezuela the offshore patrol ship Kariña (PC-24). This is the seventh vessel built by said corporation as part of a cooperation agreement reached between Spain and Venezuela in 2005. The agreement is for construction and purchase of four offshore patrol ships and four coast patrol vessels for patrol duties in exclusive economic zones, and surveillance of coasts. (AVN, 04-20-2012;

Venezuela expects arbitration award with ConocoPhillips by 2013
According to PDVSA's 2011 financial report, an arbitration award on the dispute filed by US oil company ConocoPhillips against state-run oil company Petróleos de Venezuela (PDVSA) at the International Chamber of Commerce (ICC) could be issued in 2013. (El Universal, 04-23-2012;

Oil for food barters increased by 64%
Venezuela's trade through the oil for food barter scheme increased by 64% in 2011 compared to 2010, while debt owed to Venezuela for oil shipments rose to U$D 493 million in 2011 versus U$D 301 million in 2010. Among the main items received by Venezuela are agricultural raw products shipped by countries within the Bolivarian Alliance for the Peoples of Our America (ALBA) and the PETROCARIBE oil pact. (El Universal, 04-23-2012;


Chávez rejects rumors on his health as an opposition scheme
In a telephone call from Havana, President Hugo Chavez said he would return to Venezuela on April 26, but then he must leave again for another session of radiation therapy and further medical tests. "On April 26, 27 and 28, I will be in Venezuela," he announced. (El Universal, 04-23-2012;

Authorities issue arrest order for judge fired for alleged links to drug suspect
The Prosecutor General says a request was issued through INTERPOL for the arrest of former Magistrate Eladio Aponte, who was dismissed from his post by the National Assembly on March 20 over accusations that he had ties to drug suspect Walid Makled. Aponte has accused officials in President Hugo Chavez’s government and military of manipulating court cases, and acknowledged that he had participated in these actions. Asked if he had received any calls from government officials seeking to manipulate court cases, he said: “Sure, from the president on down.” Aponte said that as military prosecutor and later as a Supreme Court magistrate, he received calls from officials including Prosecutor General Luisa Ortega and Supreme Court President Luisa Estella Morales seeking to intervene in cases. He also said there have been weekly meetings at which the Vice President met with the Supreme Court president, the chief prosecutor and other officials to lay out “guidelines” for the judiciary. (Washington Post, 04-20-2012;

US alert on the use of weapons by Venezuela
US Defense Secretary Leon Panetta has expressed concern over the use Venezuela will make of weapons is has recently bought from Russia, China and Iran. "We have no objection to the purchases, but we are concerned with they are going to do with that material". More in Spanish: (El Universal, 04-24-2012;

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.

Friday, April 20, 2012

April 20, 2012

Economics & Finance

IMF: Venezuelan economy to grow 3.2% in 2012
The International Monetary Fund (IMF) revised its growth forecast for Latin America and the Caribbean slightly upward for this year and 2013, in the IMF's World Economic Outlook released this Tuesday in Washington. Overall, the region's GDP will grow 3.7% in 2012 and pick up to 4.1% next year, 0.2 and 0.1 percentage points above estimates reported in the revision presented in January. Venezuela should grow 4.7% in 2013 and 3.2% in 2012. (El Universal, 04-17-2012;

Chavez battles re-election hurdle: Venezuela inflation
President Hugo Chavez is so determined to contain one of the world's highest inflation rates in an election year that his price control officials are sticking signs outside stores to enforce compliance. The red-yellow-green traffic light notices tell shoppers whether a store is obeying new price caps. Businesses that don't comply face fines, temporary closure or outright expropriation by his socialist government. (Reuters, 04-17-2012;

Unemployment in Venezuela down to 7.9% in March
The unemployment rate in Venezuela fell to 7.9% in March, according to the official National Statistics Institute (INE), which says the unemployment rate in 1999 was 14.6%. (AVN, 04-17-2012;

Government plans to tax idle lands
Three official agencies, the National Lands Institute (INTI), the National Customs and Tax Administration Service (SENIAT) and the Supreme Court (TSJ) are sharpening details on a bill designed to tax private and public rural landowners for idle lands or lands that used against regulations. INTI President Luis Motta Domínguez says meetings toward this end are being held with the president of the Supreme Tribunal of Justice, Luisa Estella Morales and with SENIAT's superintendent, José David Cabello. (El Universal, 04-18-2012;


PDVSA sends oil to Asia to fetch better price
PDVSA gets a higher oil price by selling crude to Asia rather than the U.S. and will continue to diversify its export markets, said company president Rafael Ramirez. Venezuela’s growing exports to Asia accounts for the country’s export basket price being above U.S. benchmark West Texas Intermediate crude, Ramirez said today at an event in Caracas. West Texas Intermediate crude on the New York Mercantile Exchange currently sells for about 11% less than Brent oil, according to data compiled by Bloomberg. (Bloomberg, 04-17-2012;

... and rules out problems with REPSOL in Venezuela
"There should be no problem," with the investments by Spanish oil company REPSOL in Venezuela, because the firm is fulfilling its obligations, Minister Rafael Ramírez told EFE. "Our relationship with REPSOL here is crystal clear. The Spanish oil company is subject to our majority stake. There should be no problem. At least, I have heard no word from REPSOL", said Ramírez when asked about the nationalization of REPSOL-owned 51% of the shares of Argentinean oil company YPF. (El Universal, 04-18-2012;

PDVSA's 2011 net profit rises 42%
Net profit at state oil company PDVSA leaped 42% to U$D 4.49 billion last year, helping to double its funding of President Hugo Chavez's government programs to almost U$D 50 billion, the company said on Tuesday. Chavez is seeking a new six-year term in the country's Oct. 7 elections and has been increasingly leaning on PDVSA, one of the world's biggest energy companies, to serve as the financial motor of his socialist "revolution". PDVSA funds everything from free health clinics to sports and cultural projects, and is leading an ambitious government plan to build hundreds of thousands of new homes. (Reuters, 04-17-2012;

and yet ... Treasury provided U$D 18.5 billion assistance to PDVSA in 2011
PDVSA's income grew 31% in 2011 to U$D 124.7 billion based on increasing oil prices. At the same time the state-run company expanded its debt and sought financial assistance from state banks and government agencies. PDVSA's financial statements show that the company issued promissory notes amounting to U$D 18.5 billion to the National Treasury (ONT) with maturities between 2011 and 2013. The ONT provided funds to Pdvsa to meet the oil company's commitments. PDVSA's balance sheet for the end of June 2011 shows that the Treasury had received U$D 2.6 billion in promissory notes issued by PDVSA up to that moment. The oil company had paid 50% of that amount in June. (El Universal, 04-18-2012;; AVN,

PDVSA plans to invest U$D 236 billion to increase oil production to 6 MBD by 2019
State oil company PDVSA plans to invest U$D 236 billion to increase crude production of 3 million barrels per day (MBD) in 2012 to 6 MBD by 2019. Petroleum and Mining Minister Rafael Ramírez says that "thanks to an increase in production at the Orinoco Oil Belt, we will reach 4 million barrels in 2014 and 6 million oil barrels in 2019. Based on these resources, we have petroleum for 300 years at the current pace of production (3 MBD) or for 150 years, when we produce 6 million barrels". (AVN, 04-17-2012;

VENALUM operations were in critical conditions even before latest conflict
Workers are collecting signatures to demand the replacement of company President Rada Gamluch, and a published document by the Plant General Manager at CVG VENALUM confirms in detail that the operating crisis in the state owned aluminum plant existed prior to the protests begun in March. The labor movement has withdrawn its support from management at the plant. At noon last Tuesday only 252 cells out of 905 remained connected, which is 27.8% capacity. Operating conditions contradict statements by Mr. Gamluch, who has claims the decrease in production is due to "sabotage"; while labor leaders say all due to mismanagement. (Policloruro Aluminio, 04-18-2012;

Demonstrators at the CVG ALCASA aluminum plant left their blood on the walls and doors of the state run industry to seek incorporation as full workers as opposed to contract labor. ALCASA operates at 35% capacity, has liabilities three times higher than assets according to its own records, and employed over 1000 coop workers in 2010 and 2011. More in Spanish: (Correo del Caroní,

International Trade

Venezuela and Vietnam have signed joint agreements for technical assistance and equipment for the development of industry, energy, communications and agriculture, and grant PETROVIETNAM drilling rights in the PETROMACAREO mixed company, to increase crude oil production in the Orinoco Oil Belt. More in Spanish: (AVN, 04-20-2012;ícolas)

Venezuela supports Argentina in the defense of its natural resources
A statement released by the Foreign Ministry says the Venezuelan Government welcomes and supports the decision by President Cristina Fernandez to nationalize Argentina's main oil company YPF. (AVN, 04-17-2012;

Logistics & Transport

The national port authority (BOLIPUERTOS) is launching a plan to replace and install fiber optics in all harbors in the country. According to Aquatic and Air Transport Minister Elsa Gutierrez-Graffe they have begun working in the Maracaibo and El Guamache ports. (Veneconomy,04-17-2012;


"No one in PSUV can fill the President's leadership "
Jesse Chacon, director of the GIS XXI polling firm says that "within the PSUV (United Socialist Party of Venezuela) there is no one who can fill he full leadership held by Chavez ". Chacon said he is speaking "for the future, when the President decides to retire, as anyone at some point". He also said his statement "bears no relation" to the elections for next October 7th as "no one will think of replacing a candidate with a 30 point lead". Chacon explains that "within the "chavista" movement there is no one who occupies the entire space, but there are emerging leaderships in some areas and would in the future need a much more collective message to cover the area today filled by Hugo Chávez". A former military officer involved in the 1992 coup attempt, Chacon held the posts of Minister of the Interior and Justice, Communications and Information, and Secretary of the Presidency under President Chavez up to the time he set up his own polling firm in 2009. More in Spanish: (El Universal, 04-20-2012;

"The Vice President directs justice in Venezuela"
Former Supreme Tribunal judge and military prosecutor Eladio Aponte Aponte says his situation boils down to "the paradox of the persecuted persecutor." "Knowing the system from inside, and how it works and how it's handled... I don't think I'd have any rights at all -not in my case at least." He recounted that he had received calls "from the President on down" to tamper with the justice system. He left the country because he fears for his safety. "Considering how many hired assassins there are, I wouldn't dare walk the streets in Venezuela," he said in an interview broadcast on Wednesday night on SoiTV (Interactive Opinion System) channel, owned by Venezuelan banker Eligio Cedeño and serving the US Hispanic community. The network released a transcript in advance of the interview, which is summarized in this article. (El Universal, 04-19-2012;

"Aponte has evidence and documents outside Venezuela", according to former US Ambassador to the OAS Roger Noriega, who believes the retired coronel will be a key witness in trials against high Chavez regime officials. Noriega was the first to publicly report that the former Supreme Court Justice was in conversations with DEA officials in Costa Rica, and says "Aponte was interviewed by the DEA and since he is now cooperating with US authorities it would be normal for him to be available to other law enforcement agencies working on cases related to Venezuelan authorities and others Venezuelans suspected of involvement with criminal activity." David Weinstein, former head of the Narcotics Division at the US Department of Justice says the former justice is a "gold mine"; and Thomas Raffanello, former head of DEA in Miami concurs, saying "they are not bringing in another drug cartel member; they are bringing in a judge from another country". More in Spanish: (El Nacional, 04-20-2012;

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.

Wednesday, April 18, 2012

April 17, 2012

Economics & Finance

Banks increase purchases of Government bonds
The Venezuelan basket of crude oil and products stands at U$D 112 per barrel year to date, but the increase in spending is so high that the Chavez regime is quickly increasing debts with local banks. The Ministry of Finance sells bonds each week to local banks and - according to official data - the government bonds portfolio held by private and state-run banks has increased by 20% in the first two months of the year, amounting to VEB 100.19 billion (U$D 23.46 billion). Debt creation will accelerate over the coming weeks as the government sells more bonds to Venezuelan banks in order to fund the agricultural sector. (El Universal, 04-16-2012;

CADIVI has authorized 1,000 million dollars for the food industry
The Currency Board (CADIVI) has approved U$D $ 1.202 billion for food imports during the first three months of the year, an increase of 16.6% over U$D 1.030 billion approved for the same period in 2011. Among the key food items purchased abroad are: yellow corn, cake and other soybean oil residues, milk powder, soybean oil, raw, unroasted malt, hatching eggs, animal and vegetable fats and oils. More in Spanish: (RNV; 04-16-2012;

Venezuela's stock-market registers world's largest growth
Venezuela's Stock Index is well above European stock-markets and showed the world's highest growth in 2012 with a 77.79% increase in equities, according to information published in the Spanish newspaper El Pais. Venezuela doubles Vietnam, which is second in the list. So far this year the index has grown 33.44%, followed by Egypt with 30.72%. An economic surge appeared by the end of 2011, when the Gross Domestic Product (GDP) went up 4.2%. Financial institutions and insurance grew 18.8%; construction, 12.8%; communications, 6.9%; trade, 5.7%; and manufacture, 3.3%. (AVN, 04-16-2012;


VENALUM operating at 28,2% capacity
Shrinking operations at the CVG VENALUM aluminum plant have taken a turn for the worse, as the industry started this week operating at 28,2% of capacity. On balance, updated yesterday, is has 26 connected cells and 649 that are out of service. 114 cells were shut down during the second week in April. More in Spanish: (El Universal;

Grupo Zuliano to buy Koch stake in Venezuela propylene plant
Grupo Zuliano CA will buy a 35% stake in a Venezuelan propylene plant from Koch Industries Inc., says Armando Sandoval, general manager of the Maracaibo-based company. The transaction, valued at about U$D35 million, will be completed by April 30. Grupo Zuliano, a Maracaibo-based holding company whose subsidiaries produce chemicals and plastics, previously had a 15% stake in Propileno de Falcon CA, known as PROFALCA, and will now hold 50%. A unit of state-run chemicals company PEQUIVEN SA holds the remaining amount. The acquisition was approved in a shareholders meeting yesterday, Sandoval said. (Bloomberg, 04-13-2012;

Venezuela oil falls to $113.85
Venezuela's weekly oil basket fell U$D 1.16 to U$D 113.85 as oil prices slipped in international markets on concerns over moderating world growth and European debt problems. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending April 13 fell to U$D 113.85, down from the previous week's U$D 115.01. (Latin American Herald Tribune, 04-13-2012;

PETROPAR prepares U$D 264 million debt payment
Sergio Escobar, president of Paraguayan state-run oil company Petropar, says he plans to travel to Venezuela this week to settle the payment of a U$D 264 million debt with state-run oil company Petróleos de Venezuela (PDVSA).
The top official added that there is an agreement to pay the debt. (El Universal, 04-16-2012;

Venezuela does little to develop its mining potential
Venezuela has the largest gold reserves sin Latin America, about 65% of the region's total, but is the country with least invests in them. The same situation arises with regard to proven iron ore reserves held by the Guayana Development Corporation and developed by Ferrominera del Orinoco, are estimated at 1.7 billion tons, and calculated probable and possible deposits add up to 13 billion tons, which make it the tenth nation in the world in iron ore reserves. More in Spanish: (El Mundo,

International Trade

Colombia and Venezuela ratified pending addenda to bilateral trade agreement, signed by the presidents of both nations in 2011. They include preferential tariff treatment, sanitary and phitosanitary regulations, and rules of origin, among others. (Veneconomy, 04-16-2012; AVN, 04-16-2012;


Chavez skips summit citing medical reasons, heads to Cuba for cancer treatment
President Hugo Chavez skipped the Summit of the Americas for medical reasons and headed to Cuba to continue with cancer treatment that is increasingly forcing him out of the international spotlight. Foreign Minister Nicolas Maduro announced the decision from Colombia, where he was attending the summit in Chavez’s place. He told state television that Chavez decided not to attend on the advice of his doctors. (Washington Post, 04-14-2012;; El Universal, 04-16-2012;

Evo Morales fears for Chavez health
Bolivian President Evo Morales says he fears for the life of his counterpart Hugo Chávez. In an interview with Bogotá's El Tiempo daily he said: "I have a lot of fear...It hurts that a commander has health problems", and added that the Venezuelan leader is "always an optimist" More in Spanish: (El Universal;

Farmers report guerrilla presence in Zulia
Farmers and peasants in the Machiques region of Zulia are reporting the presence of guerrilla groups in farms located at the foot of the mountains. They say that for the last week over 100 men armed with weapons and sophisticated warfare equipment have been visiting properties and requesting cooperation for their movement. More in Spanish: (El Nacional;

Trends in drugs trafficking in Venezuela: a "concern"
Adam Szubin, Director of US Treasury's Office of Foreign Asset Control (OFAC), the agency responsible for assistance in anti-terrorist efforts, says trends in Venezuela are "a concern". He made his statement in an interview with Caracas daily "El Universal". In 2008, the agency for the first time added senior Venezuelan government officials to its OFAC's black list of drug kingpins for alleged cooperation with the Colombian Revolutionary Armed Forces (FARC). (El Universal, 04-16-2012;

Chavez listed as the most garrulous president among those still in office, adding up over 1,500 hours of speeches during in his 13-year presidency, according to Spain's daily ABC newspaper. “Long speeches are typical of leaders who are not very fond of democracy and appeal to mobilize listeners with sensations instead of presenting arguments,” explained La Fábrica de Discursos director Fran Carrillo. (Veneconomy, 04-16-2012;

Election Board estimates 75-80% will vote in presidential elections
Socorro Hernandez, a director at the National Elections Board (CNE), estimates that between 75 and 80% of Venezuelans registered to vote will attend on October 7 for presidential elections. "High participation is expected," as it seen by registration processes. (AVN, 04-16-2012;; el Universal,

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.