Economics &
Finance
Chavez oil-fed fund obscures money
trail in Venezuela
FONDEN is the largest of a handful of secretive funds
that put decisions on how to spend tens of billions of dollars in the hands of
President Chavez. Since its founding seven years ago, FONDEN has been funneling
cash into hundreds of projects personally approved by Chavez but not reviewed
by Congress -- from swimming-pool renovations for soldiers, to purchases of
Russian fighter jets, to public housing and other projects with broad popular
appeal. The fund now accounts for nearly a third of all investment in Venezuela
and half of public investment, and last year received 25% of government revenue
from the oil industry. All told, it has taken in close to U$D 100 billion of the
nation's oil revenue in the past seven years. Finding out how much of that
money FONDEN has spent, and on what, is not easy. This perception of secrecy
has left investors unsure how to measure Venezuela's fiscal strength. Fitch
Ratings this year warned it could downgrade the country's debt, in part because
of transparency concerns. Those same concerns are also helping push up
borrowing costs. "The visible
portion that we can compare in Venezuela vis-a-vis other countries has declined
considerably," said Erich Arispe, director in Fitch Ratings Sovereign
Group. "I can't rate what I can't
see." At the same time, Chavez is under growing opposition fire over
abandoned or half-built projects, including some that received millions of
dollars from FONDEN. A Reuters reporter at a FONDEN event who approached the
finance minister -- the fund's president - to ask questions was physically
restrained by two security personnel. (The Chicago Tribune, 09-26-2012; http://www.chicagotribune.com/news/plus/sns-rt-us-venezuela-chavez-fundbre88p0n0-20120926,0,6066004.story)
Central Bank loans to PDVSA stand at
U$D 26.5 billion
Since 2007, Venezuelan state-owned oil company PDVSA has
relied on public institutions to obtain financial resources for plans and
programs assigned to it by the central Government, and the Central Bank of
Venezuela (BCV) is its foremost contributor. According to BCV data, by August 26,
2011, financial aid to PDVSA amounted to U$D 12.9 billion. One year later, such
figure increased to U$D 26.5 billion (105%). Although the Venezuelan oil basket
has averaged U$D 100, oil revenues are not enough, considering the growing
amount of liabilities. (El Universal,
09-27-2012; http://www.eluniversal.com/economia/120927/central-bank-loans-to-pdvsa-stand-at-usd-265-billion-in-2012)
PDVSA President: We are sliding into
debt, but our assets have grown
Confronting criticism on rising indebtedness by the
state-run oil company PDVSA, its president and also minister of Petroleum and
Mining, Rafael Ramirez, says that although the oil company owes the Central
Bank and private banks, "it is
important to note that company assets have grown." "We were a U$D 37 billion oil company. Today
the wealth of the company amounts to U$D 72 billion. Our assets have sparkled
Our iron, our equipment, our machinery stand at USD 183 billion,"
Ramírez explained. (El Universal,
09-27-2012; http://www.eluniversal.com/economia/120927/president-of-pdvsa-we-are-slipping-into-debt-but-our-assets-have-grown)
Commodities
Output begins at two Orinoco oil
projects
Early production began on Thursday at two joint ventures
with Russian and Vietnamese investors in the nation's huge Orinoco heavy crude
belt. The PETROMIRANDA project, where
state oil company PDVSA is partnered with Russian companies including ROSNEFT
and LUKOIL, began producing 1,500 barrels per day, a PDVSA source told Reuters.
Oil Minister Rafael Ramirez says: "These
are literally the first barrels that are being produced here ... We will also
have early production today at our joint venture with Vietnam, PETROMACAREO."
PDVSA's Russian partners have invested some U$D 800 million in PETROMIRANDA,
Ramirez added, and the project was expected to be producing 6,000 bpd soon,
eventually rising to 45,000 bpd. PETROMACAREO, where PDVSA is working with
state-run Petrovietnam, began producing 800 bpd on Thursday, he said, and is
forecast to be pumping some 4,000 bpd in the short term. (Reuters, 09-27-2012; http://www.reuters.com/article/2012/09/27/venezuela-oil-russia-idUSL1E8KR7BF20120927)
Ecuador and Venezuela to share U$D
13 billion Pacific refinery complex
Ecuador plans to process 84% of Ecuadorean and 16% of
Venezuelan crude oil in the U$D 13 billion planned REFINERIA DEL PACIFICO, a
refining and petrochemical complex project to be run by state oil companies of
the two countries. The complex is expected to process 300,000 barrels of crude
a day, but is still seeking new partners. Talks with China "are advancing well," Dow Jones
reports. (The Wall Street Journal, 09-27-2012; http://online.wsj.com/article/BT-CO-20120927-713636.html)
Venezuela and Russia agree to launch
PETRO VICTORIA
The Venezuelan government has just signed a number of
agreements with the Russian Federation, among them one that calls for setting
up PETRO VICTORIA, to exploit two areas: Carabobo 2 North and Carabobo 4 West
in the Orinoco oil belt. This agreement was entered into by PDVDSA and ROSNEFT,
and must be approved by the National Assembly. Oil and Mining Minister Rafael
Ramirez explained that Venezuela's investment with Russian companies amounts to
U$D 38 billion and projects will also be developed in the Junin 6 in accordance
with standing bilateral agreement on the joint exploitation of a group of oil
and gas fields in the river basin. More in Spanish: (AVN; http://www.avn.info.ve/contenido/venezuela-y-rusia-crean-empresa-mixta-petro-victoria;
http://www.avn.info.ve/contenido/venezuela-y-rusia-firma-acuerdo-para-construcción-infraestructura-petrolera;
http://www.avn.info.ve/contenido/russia-joins-today-extract-crude-orinoco-oil-belt;
The Washington Post, http://www.washingtonpost.com/business/venezuelan-russian-joint-venture-begins-tapping-heavy-crude/2012/09/27/daa8df98-08c2-11e2-9eea-333857f6a7bd_story.html)
FLSmidth says wins U$D48 million
Venezuela contract
Danish engineering group FLSmidth & Co A/S on
Thursday said it had won a contract in Venezuela worth U$D 48 million for
engineering, supply and installation of a feeding system for an aluminum
smelter. The order had been placed by Venezuelan state-owned aluminum company CVG
ALCASA, FLSmidth said in a statement.
The project is part of a U$D 400 million refurbishment
plan of CVG ALCASA's technologies, it said. (Reuters, 09-27-2012; http://in.reuters.com/article/2012/09/27/flsmidth-idINWEA314420120927)
Logistics
& Transport
Politics
Chavez rival maintains lead in poll
ahead of Oct. 7 election, bond markets rise
Opposition candidate Henrique Capriles Radonski
maintained his lead over President Hugo Chavez in the latest survey from
CONSULTORES 21; a Caracas- based polling company, less than three weeks before
elections. Capriles had 48.1% against 46.2% for Chavez in a poll taken at the
end of August, Consultores 21 President Luis Christiansen told a conference
hosted by the Council of the Americas in New York. The survey of 1,000 people
was taken in the last two weeks of August had a margin of error of 3.2
percentage points, Christiansen said. “If
we were to make a linear projection for the election, it would be that Capriles
will maintain an advantage of 2.5% over Chavez,” he said. According to analyst Russell Dallen: "What has lit a fire under Venezuela markets
today is the latest polling from respected firm Consultores 21 which shows
Capriles leading against Chavez, and leading by more than the margin of error
now. This has been like jet fuel for Venezuela bond markets, as the odds of
electoral regime change increase." and direct quote from Mr. Dallen. (Bloomberg,
09-19-2012; http://www.bloomberg.com/news/2012-09-19/chavez-rival-maintains-lead-in-august-consultores-21-poll-1-.html)
Even if Chavez wins the election,
his aura is gone
IMAGINE an election in which the incumbent routinely
commandeers the nation’s airwaves for endless campaign broadcasts while his
opponent gets just three minutes a day. The incumbent uses all the resources of
the state—money, vehicles, buildings—for his campaign, and he has branded state
social-welfare programs as his own personal gift. He controls the courts and
the electoral authority. No wonder that Henrique Capriles, the opposition
candidate, calls the contest between himself and Hugo Chávez, who has ruled
Venezuela for almost 14 years, one of David against Goliath, and that one of
his allies says that the election will be “free
but not fair”. Yet despite all these unfair advantages, Goliath is
threatened. There are clear signs that Mr.
Chávez’s appeal is finally fraying. Mr. Capriles is sensibly trying to close
Venezuela’s partisan divide by promising to maintain and improve most of Mr.
Chávez’s social programs, while pledging to crack down on corruption and boost
the economy by seeking the foreign investment the president has shunned. For
all these reasons, Mr. Capriles deserves to win, and he just might do so; and
even if Mr. Chávez prevails once more, Latin America’s most controversial
autocrat is a diminished figure. (The Economist; http://www.economist.com/node/21563716)
Election Board director: "The ballot is secret, vote with confidence"
National Electoral Council (CNE) director Vicente Díaz
emphasizes that balloting is secret, and has told Venezuelans to not allow
"electoral scoundrels" to
scare them. "Do not let them scare
you because the ballot is secret. Vote with confidence and liberty because,
first, your vote will count, second, it will be anonymous, and third, it will
reflect the results you want for the country". (El Universal, 09-26-2012; http://www.eluniversal.com/nacional-y-politica/120926/electoral-body-director-the-ballot-is-secret-vote-with-confidence)
Ambassador: "a vote for Chávez is a vote for Fidel"
Venezuela's ambassador to Cuba, Edgardo Antonio Ramírez, said at a press
conference in Havana that voting president-candidate Hugo Chávez Frías in the
upcoming October 7 presidential election amounted to "voting Fidel (Castro, Cuba's ex-president), peace, and union in Latin
America and the Caribbean." (El Universal, 09-27-2012; http://www.eluniversal.com/nacional-y-politica/120927/ambassador-voting-chavez-is-voting-fidel)
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