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.

Tuesday, November 20, 2012

November 20th, 2012

Economics & Finance

Economic authorities said to disagree over exchange policy
Heated arguments are reported among representatives for PDVSA, the Central Bank and the Ministry of Planning and Finance, as the Ministry has - since September - refused to supply bonds to the SITME exchange system that operates within the Central Bank, and with PDVSA saying it requires a new bond issue to repay funds advanced by the Central Bank. According to an inside source, the Ministry, headed by Jorge Giordani, shut down the supply of bonds used to allocate currency to importers on a list controlled by Giordani himself, thus worsening dollar shortages in the local market. More in Spanish: (El Nacional, 11-20-2012;

SITME operations estimated at minimum levels
A report by SINTESIS FINANCIERA shows that over the past three weeks SITME operations have gone down to "two year minimum levels, precisely as seasonal demand has been rising since August". SITME currency allocations had risen by 56% through September, thus compensating stagnant CADIVI allocations, but diminished FOREX availability has restricted SITME operations as well. Yesterday, the system processed a mere U$D 21.13 million. More in Spanish: (El Universal, 11-20-2012;

Central Bank disposable reserves down to U$D 1.6 billion
Central Bank financial statements show that disposable reserves have been dropping since August. Disposable reserves earmarked for imports and debt repayment fell to U$D 1.6 billion from U$D 1.8 billion in September, which is beneath the U$D 2-5 billion estimated as necessary by bank president Nelson Merentes. More in Spanish: (El Universal, 11-20-2012;

National Land Institute says it has "rescued" 1.11 million hectares in 21 months, claiming they were "in the hands of large landowners". This is a 206% increase in land takeovers over 2010. More in Spanish: (El Universal, 11-20-2012;

Growing imports underscore the failure of Venezuela's agriculture
One of the unfulfilled promises by President Chavez since he took office 14 years ago was to transform Venezuela into a large agricultural producer. The promise remains among the goals for the next six-year term. (El Universal, 11-19-2012;

Industry slumps to 1960's levels
The boom in oil prices conceals the critical state of local industry as imports have been the only way to meet growing demand. Central Bank data reveals signs of a weakened industry with industrial GDP for the first semester 2012 matching the same 14% it recorded in 1965. Economist José Guerra points out that this indicator shows that the national industry's production is similar to what it was five decades ago. (El Universal, 11-19-2012;

Management of state-owned companies riddled with inefficiency
President Chavez has pledged to implement tougher measures against inefficiency in the state-owned companies, as most projects started by his government have failed over the past years. (El Universal, 11-17-2012;

Stock market up 228%
Venezuela stocks rose sharply the week ending November 16, with the Caracas Stock Index increasing by 4.1%, closing at 383,419. Envases Venezolanos was the leading gainer, up 51% at Bs. 100; followed by Corimon up 22% at Bs. 380; Fondo de Valores Inmobiliarios B, up 16.7% to Bs. 14. Manpa was the only stock losing ground, down 14.2% to Bs. 4.5. All other stocks were flat or did not trade. The Venezuela Stock Market is now up 227.61% for the year to date. (Latin American Herald Tribune, 11-19-2012;


FERROMINERA denies raid
Sources within FERROMINERA, the main State iron ore company, reported that agents from the Military Intelligence Department (DIM), the Defense Ministry's security agency, are investigating the irregular dispatch of trucks laden with iron ore from the main operating headquarters of the main State owned iron ore enterprise , destined to ports from which the ore is shipped abroad. They say operation aims at an intricate system of contacts and corruption, yet the DIM investigation has so far aimed at establishing responsibilities by personnel within the contingency and road control department, and the loss prevention and control section of FERROMINERA's Asset Control Management. The company has issued no statement about the presumed breach in controls at the state owned company, at points were outgoing product is verifies and approved. A worker says "This has been going on for a long time", and added that DIM is investigating some 16 company officers. FERROMINERA President Radwan Sabbag has denied the reports. More in Spanish: (El Universal, 11-20-2012;; Correo del Caroní, 11-19-2012;

Shinsho plans U$D 300 million Venezuela steel investment
Japan’s Shinsho Corp. plans to invest more than U$D300 million in the Venezuelan steel industry in the Guayana region, El Mundo reported.  Shinsho is holding meetings today with officials from state-run companies including Siderurgica del Orinoco, or Sidor, the Caracas-based newspaper said. (Bloomberg, 11-19-2012; Shinsho Plans $300 Million Venezuela Steel Investment)

PDVSA increases imports of components for gasoline
According to figures from the United States Energy Information Agency’s (EIA) Administration Office, PDVSA imports Methyl tert-butyl ether (Mtbe) and other chemical products in order to increase gasoline octane rating and process gasoline due to the precarious situation of local refineries. (Veneconomy, 11-19-2012;

OPEC reports 1.8% drop in Venezuela's oil output
Data supplied by the Organization of Petroleum Exporting Countries (OPEC) shows Venezuela's oil drilling in October slipped 1.8%. According to secondary sources, cartel figures show that Venezuela produced 2.33 million barrels of oil per day (bpd) in October 2012, compared to 2.38 million bpd drilled in October 2011. In October this year, however, the Venezuelan monthly output grew 18,300 bpd, or 0.7%, compared to September 2012. (El Universal, 11-19-2012;

International Trade

Venezuela-Colombia trade agreement now in force
Customs headquarters at San Antonio del Táchira, on the Venezuela-Colombia border, told the Bi-national Economic Integration Chamber (CAVECOL) that the partial agreement between both nations - signed one year ago by Presidents Chavez and Santos - entered into force yesterday as trade authorities have adapted customs technology to the new requirements and have notified ALADI (Latin American Integration Association) of the terms agreed to. More in Spanish: (El Universal, 11-20-2012;

Logistics & Transport

Bolivariana de Puertos announced they would begin a special plan to dispatch cargo in all ports nationwide, beginning last Saturday and all through December. Bolipuertos also set up a new application in its web page ( so customs and shipping agents, and importers and exporters can run liquidation of storing services online instead of having to go to the administrative offices at ports. (Veneconomy, 11-19-2012;


Opponent of Hugo Chavez pushing for release of imprisoned government adversaries
Venezuela’s opposition leaders are calling on President Hugo Chavez to grant amnesty to the country’s self-proclaimed political prisoners. Opposition congressman Edgar Zambrano said he was optimistic after presenting a proposed bill amnesty bill to the National Assembly on Thursday. “We perceive willingness within the government” to liberate some government opponents and allow others to return to Venezuela after years of exile, Zambrano said. (The Washington Post, 11-16-2012;

Inter American Human Rights court about to decide another case against Venezuela
The Inter American Human Rights Court is getting ready to issue a third sentence against Venezuela within this year, based on Government failure to identify and punish the killers of human rights activist Joe Castillo, which took place in Zulia state in 2003. More in Spanish: (El Universal, 11-20-2012;

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