Economics &
Finance
Deficit estimated at U$D 75 billion
The Government's fiscal deficit by the end of 2012 is
projected at U$D 75 billion, which is 15% of GDP, according to research firm ECOANALITICA.
The projection shows that in a year the gap in public accounts will be 3.6
points of GDP (45 billion) above 2011. GDP estimated for the end of this year
stood at U$D 418.4 billion. More in Spanish: (El Nacional, 05-10-2012; http://www.el-nacional.com/)
New PDVSA bonds appear aimed at
state-run banks
The impending issue of U$D 3 billion in bonds by state-run oil company
Petróleos de Venezuela (PDVSA) will be sold mainly to state-run banks, according
to sources knowledgeable operation. The long-anticipated issue, the first in
2012, seems to mark the beginning of further borrowing expected in the election
year in order to boost public spending as Chavez seeks re-election in October.
A source close to the operation told Reuters that the PDVSa issue was primarily
intended for the Central Bank of Venezuela in order to supply the Foreign
Currency Transaction System (SITME). (El Universal, 05-10-2012; http://www.eluniversal.com/economia/120510/sources-pdvsa-bonds-sale-is-aimed-at-state-run-banks)
Commodities
230,000 bpd of oil committed to
repay debts with China
The financial agreement between Venezuela and China was
amended. Henceforth, Venezuelan shipments of oil cannot be less than 230,000 bpd
in order to repay the three-year loans agreed with the Asian country. Last
February, the government expanded cooperation agreements with China and
authorized the amendment. (El Universal, 05-10-2012; http://www.eluniversal.com/economia/120510/venezuela-assigns-230000-bpd-of-oil-to-repay-debt-with-china)
PetroChina seeks to buy Aruba
refinery to expedite deals with PDVSA
China's state oil company PETROCHINA is reportedly
negotiating the purchase of Valero Energy's idle refinery in Aruba, sources
told Reuters. In a filing with the US Securities and Exchange Commission (SEC),
Valero said it had received a non-binding indication of interest for the 235,000
bpd Aruba refinery for U$D 350 million plus working capital. The US company did
not identify the interested party. (El Universal, 05-10-2012; http://www.eluniversal.com/economia/120510/petrochina-seeks-to-buy-aruba-refinery-to-facilitate-deals-with-pdvsa)
U$D 112 million contract to expand Palúa
dock in Bolivar State
Ricardo Menéndez, Minister in charge of the energy
industry has signed a contract with China CREC Railway Engineering, Shen
Yaoxing for U$D 112 million in order to expand the Palua pier, owned by
Ferrominera Orinoco (FMO), San Felix, Bolivar State. These funds will be used
to expand docking capacity. More in Spanish: (AVN, 05-10-012; http://www.avn.info.ve/contenido/suscriben-contrato-112-millones-dólares-empresa-china-para-ampliar-muelle-palúa-bolívar)
Electricity sector, a case of public
ownership
The electricity sector has been controlled by the public sector
since its nationalization in July 2007. Sector planning and policy design are
the responsibility of the Ministry of Popular Power for Electricity (MPPE), and
service is provided by state owned Corporacion Electrica Nacional S.A.
(CORPOELEC); a vertically integrated monopoly in charge of generation,
transmission, distribution and retail of electricity. CORPOELEC has close to 100% public ownership,
and - according to Fitch Ratings - is dependent on public funding for day to
day operations ever since tariffs were frozen in 2002 and the company was
subjected to strict budgetary control. (Reuters, 05-10-2012; http://www.reuters.com/article/2012/05/10/idUSWNA701220120510)
Reported failures in Moron Plant
The AGROPATRIA fertilizer plant in Moron, Carabobo state, is working at
minimum capacity. Employees and workers complain of poor conditions in which
they are operating. It is plant for natural fertilizer mixtures, the only of
its kind in Venezuela and the second in Latin America. When AGROISLEÑA was
expropriated by the government it became part of AGROPATRIA. More in Spanish: (El
Nacional, 05-10-2012; http://www.el-nacional.com/)
Politics
Two former justices reveal ties
between Venezuela's government, military and drug trafficking
Luis Velasquez Alvaray, a former Justice of the Supreme Court
(TSJ), exiled in Costa Rica since 2006, has charged that top Venezuelan
Executive and Judicial officials are allegedly involved in drug trafficking and
operations in Venezuela by Colombia's Revolutionary Armed Forces (FARC), a
guerrilla group. During an interview with a Miami-based TV station, Velasquez
claimed the Judiciary "has been
penetrated by drug trafficking", and added that TSJ President Luisa
Estella Morales is aware of the situation and has done nothing about it. Another
former judge Supreme Court Justice Eladio Aponte is in contact with the DEA and
may testify publicly on the links between members of the Venezuelan government
with drug trafficking and corruption once his family enters witness protection,
according to statements by two U.S. officials to the AP news agency.(El
Universal, 05-10-2012; http://www.eluniversal.com/nacional-y-politica/120510/former-tsj-justice-reveals-ties-between-the-military-and-drug-traffick) and more in Spanish: (Tal Cual,
05-10-2012; http://www.talcualdigital.com/index.html)
Chavez rival struggles to close gap
in Venezuela race
On a heady night in mid-February, Henrique Capriles
roared himself hoarse with optimism at his victory rally in Caracas after
trouncing rivals to win the Venezuelan opposition's presidential ticket. Three
months later, despite an exhausting "house-by-house"
tour intended to galvanize the nation behind him, Capriles remains firmly stuck
behind President Hugo Chavez in most polls. (Reuters, 05-10-2012; http://www.reuters.com/article/2012/05/10/us-venezuela-election-opposition-idUSBRE8490WJ20120510)
UNASUR is studying sending observers
to the October presidential
elections by request of Venezuelan government, says the office of if the
Secretary General. The Foreign Ministers of the 12 member countries will
discuss the request in Bogota on June 11 when Colombian María Emma Mejía hands over
the secretrariat to Venezuela's Alí Rodríguez. (Veneconomy, 05-10-2012;
Caracas seeks to host Summit of the
Non-Aligned Movement in 2015
Foreign Minister Nicolas Maduro has said that the Foreign Ministers of
the Non-Aligned Movement (NAM), met in Egypt, approved holding their 16th
summit in Caracas. (AVN, 05-11-2012; http://www.avn.info.ve/contenido/caracas-host-summit-non-aligned-movement-2015)
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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