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.

Friday, July 18, 2014

July 18, 2014

International Trade

Imports into Puerto Cabello:
  • 1,500 tons of auto and motorcycle parts o from Ningbo Segel Int and Ica Internacional for Distribuidoras Repuestos Cacique y Corporación Automotriz ZGT
  • 947 tons of spaghetti and noodles from Pastificio Selmi for CASA
  • 874 tons of infant milk formula from Nestlé Colombia for the Nestlé subsidiary in Venezuela
  • 825 tons of wheat flour in paper bags from Colombia for CASA
  • 705 tons of trousers, televisions, air conditioners, shorts, flip flops, clothes in general, shorts, socks, sandals and dental products from Panamá
  • 668 tons of beans from Albalinisa for CASA
  • 574 tons of glucose from Caribbean Liquid Sugar, Cartagena for CASA
  • 480 tons of milk powder from La Dominicana for CASA
  • 366 tons of milk from Cooperativa Productores de Leche y Centrolac for CASA
  • Over 300 tons of black beans from Dalian Merry Trading for Internacional Grain de Venezuela
  • 276 tons of beef from Industrial Comercial San Martín y Matadero Nuevo Carnic for CASA
  • 212 tons of drugs from Farmacuba for Fundación Oro Negro
  • 59 tons of toilet paper from Kuehne & Nagel for its subsidiary in Venezuela

19 ships remain at bay in Puerto Cabello
One of them is carrying 27,000 tons of wheat; three are bringing 90,000 tons of sugar, and one has 6,000 tons of rice, all of them for CASA. More in Spanish: (El Nacional; http://www.el-nacional.com/

60% overpricing is found in cattle imported from Brazil
Nutrition Minister General Hebert García Plaza has been given a list - also sent to Executive Vice President Jorge Arreaza - identifying 26 "ghost" companies that bought cattle in Brazil after being given exclusive import rights by the Agriculture Ministry. Cattle was then bought in Brazil at U$D 2,240.56 per ton at the official VEB 6.30/U$D 1 rate, and resold at Venezuelan ports - mainly Puerto Cabello - at a form of auction which allocated the cattle to the highest bidder. More in Spanish: (El Nacional; http://www.el-nacional.com/)

11 tons of Venezuelan beef and fish impounded by Colombia, Presidents to discuss staple contraband
Colombia's fiscal and customs authorities have impounded some 11 tons of fish and beef smuggled from Venezuela in the border state of North Santander. President Nicolás Maduro and Colombian President Juan Manuel Santos are scheduled to meet on August 1st to discuss outgoing contraband. (AVN, http://www.avn.info.ve/contenido/maduro-santos-discuss-smuggling-staple-goods-august-1; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/incautan-en-colombia-once-toneladas-de-carne-y-pes.aspx#ixzz37iyvlH88)


Logistics & Transport

Outgoing flights down by more than 50%, AIR EUROPA to cut flights by 57%
As this year started there were 352 weekly outgoing flights from Venezuela. Six and a half months later that number is down to 148 weekly flights, a 42.03% frequency loss, according to a report by the Venezuelan Airline Association. Spain's Air Europa has been the latest to cut, announcing a 57% flight reduction starting in August. More in Spanish: (El Nacional; http://www.el-nacional.com/)


Oil & Energy

CITGO using new debt to send PDVSA cash
PDVSA intends to use new debt sold by its U.S.-based subsidiary CITGO to transfer U$D 300 million back to Venezuela. According to Standard & Poor's CITGO plans to issue U$D 650 million in new debt for "debt refinancing" and "pay U$D 300 million in dividends to PDVSA". More in Spanish: (El Universal, http://www.eluniversal.com/economia/140717/citgo-se-endeuda-para-otorgar-dividendos-a-pdvsa; El Nacional; http://www.el-nacional.com/)

US should be ready if PETRO CARIBE tightens credit terms, study says
The possibility that Venezuela’s financial support for energy imports in the region could erode quickly makes it imperative for the Obama administration to adopt a wide range of policies to avoid an energy crisis in the Caribbean and Central America, a recent Atlantic Council report said. “It’s almost 10 years since Venezuela announced the PETRO CARIBE program, which sells products at market benchmarks, but provides credit financing,” says David L. Goldwyn, president of Goldwyn Global Strategies LLC and a senior nonresident energy fellow at the Atlantic Council’s Adrienne Arsht Latin America Center. PETRO CARIBE has been an enormous political success and a significant financial drain for Venezuela, he noted. (Oil & Gas Journal, http://www.ogj.com/articles/2014/07/us-should-be-ready-if-petro-caribe-tightens-credit-terms-study-says.html)

Venezuela’s loss of thousands of oil workers has been other countries’ gain
In 2003 Venezuela’s then president, Hugo Chávez, fired more than 18,000 employees, almost half the workforce, of the state-run oil corporation, Petróleos de Venezuela (PDVSA). Their offence was to have taken part in a strike called in protest at the politicization of the company. Their punishment was to be barred from jobs not only in PDVSA itself but also in any company doing business with the oil firm. The axe fell heavily on managers and technicians: around 80% of the staff at INTEVEP, PDVSA’s research arm, are thought to have joined the strike. At the stroke of a pen, Venezuela lost its oil intelligentsia. It was a blow from which PDVSA has never recovered. The firm’s oil production has since stagnated, despite a big run-up in prices. The Center for Energy Orientation, a Venezuelan NGO, says the number of incapacitating injuries due to accidents at PDVSA rose from 1.8 per million man-hours in 2002 to 6.2 in 2012. Venezuela’s loss was others’ gain. Not all of the former PDVSA employees stayed in the oil business; a minority chose to remain in Venezuela. But thousands went abroad—to the United States, Mexico and the Persian Gulf, and to farther-flung places like Malaysia and Kazakhstan. (The Economist, http://www.economist.com/news/americas/21607824-venezuelas-loss-thousands-oil-workers-has-been-other-countries-gain-brain-haemorrhage)


Commodities

Drought imperils 20% of cattle in Venezuela
The Venezuelan Cattle Federation has reported at least 200,000 dead heads of cattle and says 20% of the entire stock is at risk due to lengthy drought. They urged the government to import animal feed. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/agro/efe--sequia-en-venezuela-pone-en-riesgo-el-20--de.aspx#ixzz37d84OiJx)


Economy & Finance

Russia approves new line of credit for Venezuela
Communication and Information Minister Delcy Rodríguez says Russia has approved a new credit line for Venezuela following a meeting between President Nicolás Maduro and his Russian counterpart, Vladimir Putin, during the Sixth BRICS Summit, attended by Bolivia, Argentina, Uruguay, and other countries. (El Universal, http://www.eluniversal.com/economia/140717/russia-approves-new-line-of-credit-for-venezuela)

Maduro to seek financing from BRICS (Brazil, Russia, India, China and South Africa) for development projects. He did not give details as to countries, amounts or projects. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40232&idc=2)

12-month inflation tops 62% in June - report
Venezuelan consumer prices rose 62.1% in the 12 months ending in June, boosting pressure on President Nicolas Maduro to control inflation. That figure would be the highest since the nation revamped its methodology for calculating consumer prices in 2008, accelerating from the 60.9% inflation reported by the Central Bank for May. Consumer prices rose 5.5% in June, slightly below the 5.7% increase the bank reported for May. (Reuters, http://www.reuters.com/article/2014/07/15/venezuela-economy-idUSL2N0PQ0S720140715)


Politics

Maduro claims Venezuela is in "very good financial health", announces "fiscal revolution"
During a Friday speech that was touted as an announcement of new economic policies, President Nicolás Maduro claimed the nation is in "good economic health", said the government has sufficient FOREX to meet all needs, and will strengthen domestic production. He also said a "fiscal revolution" is due, but gave no details saying: "We are listening to expert opinion and will provide details later". Maduro also said the government "will audit every single dollar delivered (to the private sector) this year".  The President of the Foreign Trade Center (CENCOEX) later said the audit would inspect the past 5 years. More in Spanish: (PDVSA, http://www.pdvsa.com/; AVN; http://www.avn.info.ve/contenido/maduro-destaca-cumplimiento-del-plan-nacional-divisas-2014; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/gobierno-llevara-a-debate-publico-proyecto-de-revo.aspx#ixzz37d5ySJiF; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-auditaremos-cada-dolar-entregado-en-2014.aspx#ixzz37d6Xz7aW; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/verificacion-abarcara-5-anos-de-uso-de-divisas-de-.aspx#ixzz37iy8CIxT; El Universal, http://www.eluniversal.com/economia/140716/maduro-anuncia-la-revolucion-fiscal-para-el-segundo-semestre)

Nicolás Maduro’s 31 ministries will be subjected to a month long evaluation of all their procedures and decisions. The first ones to be reviewed will be the economic ministries between July 22 and July 23. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40236&idc=1)

Capriles: Venezuela's issues exacerbated by Maduro's economic policies
Opposition leader Henrique Capriles Radonski has disputed President Maduro's claim that the economy is in "good health" and says the Venezuelan economic scenario worsens each year due to policies undertaken by Maduro's government. In order to generate better jobs and achieve economic growth, Capriles says the government must offer stability to foreign investors; this will diversify the domestic production apparatus. (El Universal, http://www.eluniversal.com/nacional-y-politica/140716/capriles-venezuelas-issues-exacerbated-by-maduros-economic-measures)

Protests rise 278% during the first half of 2014
As many as 6,369 protests, equivalent to 35 a day, were registered nationwide in Venezuela during the first half of 2014, a 278% increase over the same period of 2013, when 1,687 protests were recorded, according to the most recent report presented by the Venezuelan Observatory of Social Conflict (OVCS). (El Universal, http://www.eluniversal.com/nacional-y-politica/140717/protests-jump-278-in-the-first-half-of-2014)

López calls for more protests to lead the government to talks
Opposition leader Leopoldo López, who has been in jail since February 18, has sent a letter saying it is necessary to renew "non violent protests" so that the government "agrees" to a dialogue; and calls for restructuring the Democratic Unity Conference (MUD) opposition alliance. "There is no effective dialogue without pressure from the streets", he wrote. More in Spanish: (Infolatam)


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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