July 01, 2014

International Trade

More than 100,000 tons of foodstuff await at bay

Fourteen (14) ships are anchored at Puerto Cabello waiting to offload more than 100,000 tons of foodstuff. Eight are carrying bulk cargo (6 of them fertilizers) and another six carry containers. Freight includes 33,000 tons of yellow corn; 30,000 tons of sugar; 22,000 tons of rice; and 25,000 tons of soy. 636 tons of cardboard arrived from the Tetra Pak Global in the US for their local affiliate; as well as 46 tons of paper from Channeled Resources for Tickets Magnéticos. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-100-mil-toneladas-de-alimentos-aguardan-en-bahia-2188545/2014/06/30/335689)

Logistics & Transport

SICAD 2 exchange rate for airfare may hurt airlines

The Venezuelan Association of Airlines (ALAV) says the government's decision to set airfares in US dollars at the Second Ancillary Foreign Currency Administration System (SICAD 2) exchange rate, that is, VEB 50 per US dollar, up from VEB 10 (SICAD 1) "could shrink the sector, and diminish air connections because of lower demand for plane tickets." (El Universal, http://www.eluniversal.com/economia/140630/alav-sicad-2-for-airfare-may-hit-the-sector)

Oil & Energy

Widespread blackouts hit Venezuela

A power plant failure knocked out electricity across a large part of Venezuela, interrupting a nationally televised presidential ceremony and forcing a suspension of subway and train services around the country. The outage affected at least 14 of the country's 23 states and caused several hours of traffic jams, as well as darkening homes and offices, in the capital, Caracas, on Friday. The plant, supplying electricity to Venezuela's central and western regions, failed in the early afternoon, said the electricity minister, Jesse Chacon. Power was mostly restored in Caracas by nightfall but remained out in other parts of the country, where power failures are more common. The outage disrupted a televised celebration of journalists that President Nicolas Maduro was holding in the governmental palace in Caracas. The city's sidewalks filled up with pedestrians who overflowed into the traffic lanes. (The Guardian, http://www.theguardian.com/world/2014/jun/28/widespread-blackouts-hit-venezuela)

 Electric power may finally be restored in Monagas state after some districts have experienced up to 72 hours without electricity following Friday’s blackout. According to Electric Energy Minister Jesse Chacón eight power towers collapsed in that state and interrupted service. Monagas Governor Yelitze Santaella suspended classes since there is no electricity or water in most of the state. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39968&idc=3; Bloomberg, http://www.bloomberg.com/news/2014-06-27/venezuela-power-cut-leaves-half-of-country-without-supply-2-.html)

National Palestinian Authority to buy oil from Venezuela

The National Palestinian Authority (ANP) will buy oil from Venezuela to satisfy its needs in the next five years. A government source reported that oil shipments will be delivered through Israel or Jordan, and the price is expected to be lower than the amount Palestinians are currently paying. These purchases are part of an agreement reached during a meeting held between President Nicolás Maduro and his Palestinian counterpart, Mahmoud Abbas. The first shipment will be for 240,000 barrels. (El Universal, http://www.eluniversal.com/economia/140630/national-palestinian-authority-to-buy-oil-from-venezuela)

PDVSA's receivables from CORPOELEC are U$D 2.85 billion

Funds owed to oil giant PDVSA's by government agencies continue to increase. According to an audit of PDVSA's financial report, the National Electric Power Corporation (CORPOELEC) owed PDVSA U$D 2.85 billion, up 6.7% from U$D 2.67 billion in 2012. According to the audit, CORPOELEC's debt is "derived mainly from PDVSA supplying light diesel, and giving financial support for the purchase of equipment for the national power grid." PDVSA's receivables are up 37% since 2011. (El Universal, http://www.eluniversal.com/economia/140630/pdvsas-receivables-amount-to-usd-285-billion)

Commodities

Illegal strike paralyzes POLAR's Caracas beverage plant

An illegal strike by the union at the main POLAR beverage plant in Caracas has paralyzed production and distribution of beer and malt in the entire metropolitan area. The strike takes place after the company presented a proposal with substantial salary and benefit increases, which the union has refused to discuss. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/polar-sindicato-paraliza-ilegalmente-produccion-de.aspx#ixzz36DDY3T37; El Universal, http://www.eluniversal.com/economia/140701/polar-denuncia-parada-ilegal-de-planta-de-cerveza; El Nacional; http://www.el-nacional.com/)

Economy & Finance

BARCLAY's projects a 2.9% GDP drop for Venezuela

BARCLAY'S Capital is projecting a 2.9% drop in GDP for Venezuela. Their report says the departure of Jorge Giordani as Planning Minister strengthens the "pragmatic" wing of the cabinet "but a group fragmented into different interest group remains as the cause for delays in economic reform". More in Spanish: (El Universal, http://www.eluniversal.com/economia/140701/barclays-proyecta-que-pib-de-venezuela-caera-29)

Politics

Maduro says he will overhaul his government, seeks to move on from infighting

President Nicolás Maduro announced he will be carrying out a full review of the government between July 1-15, including implementation of the national budget. He also called for moving on after "infighting", in reference to criticism of his administration from within "chavista" ranks.  He says there will be a global "restructuring" of the government in order to seek "maximum efficiency, maximum honesty". On criticism received from former ministers he added: "We already said all we have to say, done, now our hand is extended and our embrace ready for all comrades".  More in Spanish: (Infolatam)

Nicolás Maduro could start announcing his new ministers this week, starting with the Defense Minister, in advance of yearly July 5 military promotions and in view of the controversy caused by the TSJ’s ruling authorizing the military to participate in public political acts. According to sources close to the regime, the new Defense Minister would be current CEOFANB Chief Major General Vladimir Padrino López. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39970&idc=1)

South Florida legislators say "mess in Venezuela calls for decisive U.S. action"

 In a joint article representatives Ileana Ros-Lehtinen and Mario Díaz-Balart say that "the U.S. Congress overwhelmingly supports tough action against Maduro’s oppression ..yet the Obama administration continues to wrangle with Congress over even the most noncontroversial sanctions, such as denying visas to Venezuelan human-rights abusers. President Obama’s response has been slow, weak and tragically confused. Apparently, President Obama thinks America has more to gain in Venezuela by not rocking the boat than by standing firm for democracy and human rights... It is time to stop the endless discussion and circumspection. It is time for President Obama to change course, end his coddling of Maduro and side with the people of Venezuela who are demanding an end to intimidation and repression." (The Miami Herald, http://www.miamiherald.com/2014/06/30/4211250/mess-in-venezuela-calls-for-decisive.html#storylink=cpy)

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.