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, January 28, 2014

January 28, 2014

Economics & Finance

FOREX supply practically shut down in January
The new FOREX supply systems launched by the Maduro regime have not yet begun to function and there is still a very slow process of approval and disbursement of FOREX which is threatening economic growth. It was said that CADIVI would continue to operate normally until the new system kicked in, but in reality FOREX supply was shut down, according to business sources. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140128/en-enero-hubo-cierre-parcial-en-oferta-de-divisas-a-las-empresas)

Venezuelan business has a dim view of the future
PWC unveiled its "17th Global CEO poll" at the Davos World Economic Forum, a study on CEO confidence in economic growth within their nations, and Venezuela shows at the lowest rankings, align with South Africa, Spain, France and Argentina. Their 2013 study showed 30% of CEO's in Venezuela had some confidence in the future, but the number dropped to 25% this year. (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/empresas-en-venezuela-muestran-poca-confianza-en-e.aspx#ixzz2rgsgf0Up)

Venezuela's FOREX rate averages VEB 7.6/U$D after devaluation
Pressured by foreign currency demand, the Venezuelan government has partially devalued the local currency, thus adjusting the exchange rate for some sectors of the economy from VEB 6.30 per dollar to the rate of the Ancillary Foreign Currency Administration system (SICAD), VEB 11.30. DEUTSCHE BANK reports that the move translates into an average FOREX rate of VEB 7.6 per dollar. The investment bank believes the FOREX rate will remain below VEB 10 per dollar, even if Sicad's rate is progressively adjusted to VEB 20 in the months ahead. (El Universal, 01-27-2014; http://www.eluniversal.com/economia/140127/venezuelas-forex-rate-averages-veb-76-per-dollar-after-devaluation)

FOREX allocation dropped 16% in 2013
Despite high oil prices, the Venezuelan government has cut the amount of foreign currency allocated to meet the requirements of the private sector, such as imports and travels, and part of public sector spending. Official numbers show that in 2013, total foreign currency approved: Foreign Exchange Administration Board (CADIVI), ALADI, SUCRE, Ancillary Foreign Currency Administration System (SICAD) and extinct Transaction System for Foreign Currency Denominated Securities (SITME), was USD 37.7 billion, which is a 16% drop from 2012 and the lowest level in the past four years. (El Universal, 01-25-2014; http://www.eluniversal.com/economia/140127/with-oil-prices-at-usd-99-forex-allocation-sheds-16)

Fitch Affirms Ratings of Top 4 Private Venezuela Banks
Fitch Ratings has affirmed the ratings of four private sector Venezuelan banks, including:
--Banesco, Banco Universal, CA (BBU);
--Banco Provincial, S.A., Banco Universal (Provincial);
--Mercantil, C.A. Banco Universal (Mercantil);
--Banco del Caribe, C.A. Banco Universal (Bancaribe).
The banks included in this peer review have assets between U$D10 billion and U$D33 billion with operations primarily in Venezuela. All of these banks' Viability Ratings (VRs), or stand alone intrinsic financial strengths, drive their IDRs and do not take into account either institutional or state support. (Latin American Herald Tribune, 01-26-2014; http://www.laht.com/article.asp?ArticleId=1522619&CategoryId=10717)
Oil & Energy

Ten firms are interested in mature oil fields
State owned PETROAMAZONAS received bids for new technology in their 17 mature oil fields, those that have been in operation for more than 30 years. Bidding companies were: HAICHENG Petroleum, the PACOA consortium (PACIFPETROL, ANDIPETRÓLEOS, and Santa Elena Oil), YPF , the SERTEPECT, CANACOL y EDINPETROL consortium, the CENTIPETROL consortium (SERTECPET, MONTECZ y EDIMPETROL), the PAÑATURI consortium (SINOPEC China - SINOPEC Ecuador), the SCHLUMBERGER - TECPETROL, HALLIBURTON consortium, the Río Aguarico consortium (WEATHERFORd - CNPC China) y and the Key - Panthers consortium. More in Spanish: (Diario El Comercio, http://www.elcomercio.com/negocios/Petroamazonas-crudo-camposmaduros-petroleo-inversiones_0_1074492639.html)

PDVSA arrives at settlement with oil service provider in Lake Maracaibo
State-run oil holding Petróleos de Venezuela (PDVSA) put an end to an arbitration proceeding at the International Chamber of Commerce (ICC) over a service agreement with the SIMCO Group for maintenance and operation of treatment and water injection plants related to oil production in Lake Maracaibo, west Venezuela. PDVSA announced
a deal was struck with Wood Group Engineering (North Sea) Limited and SIMCO Group. (El Universal, 01-27-2014; http://www.eluniversal.com/economia/140127/pdvsa-arrives-at-arrangement-with-oil-service-provider-in-lake-maracai)

Venezuela oil price jumps
Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor but bounced higher after four straight weeks of falls. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending January 24 was U$D 96.05, up U$D 1.86 from the previous week's U$D 94.19. (Latin American Herald Tribune, 01-25-2014; http://www.laht.com/article.asp?ArticleId=1521591&CategoryId=10717)
Commodities

Food prices the highest in 18 years
The Central Bank of Venezuela (BCV) reports that the price of food and non-alcoholic beverages jumped some 2.5% in December 2013, bringing 2013 food inflation up to 74%, the highest since 1996. Price increases come amid food shortages. Official data shows the lack of basic staples in Caracas worsened throughout 2013 and hit 22% ending October, the highest in 46 months. (El Universal, 01-27-2014; http://www.eluniversal.com/economia/140127/food-prices-in-venezuela-the-highest-in-18-years)

MERCAL storerooms at Puerto Cabello are empty
MERCAL - the government official low cost food distribution agency - warehouses at Puerto Cabello municipality are empty as they have received no merchandise since December. More in Spanish: (Notitarde, http://www.notitarde.com/La-Costa/Las-bodegas-de-Mercal-estan-vacias-2095739/2014/01/27/299867; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/92221/-bodegueros-de-mercal-denunciaron-desabastecimiento-desde-hace-un-mes

Opposition warns about health threat caused by poor nutrition
The opposition Democratic Unity Conference (MUD) has issue a statement warning that the chronic scarcity of foodstuff and runaway inflation are especially hurting pregnant women, children and teenagers in low income families - and demanded that the government stop improvising in this area. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140128/mesa-alerta-que-peligra-salud-nacional-por-la-mala-alimentacion)
International Trade

Cabello charges 30% of Venezuela's food production is smuggled to Colombia
Logistics & Transport

Customs agents are selling off assets due to dropping imports
Few customs agents around La Guaira port have started operations after the Christmas season. Dropping imports have led some companies to close or sell off their assets, according to Eduardo Quintana, FEDECÁMARAS Vice President in Vargas State. Companies that are operating are returning cargo that arrived in La Guaira port but cannot be received as importers are unable to immediately pay the cost, and international suppliers are closing down credit lines, says Quintana. He adds that "out of 2300 registered customs agents there are only 800 left and 80 of them at La Guaira". More in Spanish: (El Nacional; http://www.el-nacional.com/)

BOLIPUERTOS is meeting with all parties involved in port activity to face unclaimed cargo situation
The National Port Authority (BOLIPUERTOS) has called a meeting of all carriers, shipping agents, port operators, cargo compactors, consignees and customs agents to determine what to do with cargo that remains stored at port for more that 35 days. According to Eduardo Quintana, FEDECÁMARAS Vice President for Vargas State, government companies and agencies are the nation's largest importer and most of the "legally abandoned" cargo is theirs. "In the SIDUNEA system they have a registry of who brought in merchandise, and who owns it", says Quintana. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Bolipuertos-convoca-a-entes-de-la-actividad-portuaria-2095760/2014/01/27/299875; and El Nacional; http://www.el-nacional.com/)

Airlines in Venezuela face inspections this week, negotiations on repayment could be stalled
Venezuelan authorities will begin inspections on airlines operating in the country. Transport Minister Hebert García Plaza and Finance Minister Rodolfo Marco Torres told airlines operating in Venezuela that payments for the sale of tickets in 2014 would be back to normal and authorities would discuss with each airline the debt of 2013, sources told EFE. However, Rafael Guerra, Director of the Tourism Council (CONSETURISMO) believes negotiations between the government and airlines could be "somewhat stuck" over what should be paid to the airlines and how. (El Universal, 01-27-2014; http://www.eluniversal.com/economia/140127/airlines-in-venezuela-to-face-inspections-this-week; and more in Spanish: El Universal, http://www.eluniversal.com/economia/140128/creen-que-el-juego-podria-estar-trancado-entre-gobierno-y-aerolineas)
Politics

Maduro meeting with the presidents of Colombia and Mexico
Foreign Minister Elías Jaua reports that President Nicolás Maduro will hold bilateral meetings with the presidents of Colombia, Juan Manuel Santos, and México, Enrique Peña Nieto, during the Presidential Summit of the Community of Latin American and Caribbean States (CELAC), currently underway in Havana. More in Spanish: (AVN; http://www.avn.info.ve/contenido/maduro-se-reunir%C3%A1-este-martes-presidentes-colombia-y-m%C3%A9xico)

 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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