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, August 8, 2014

August 8, 2014

International Trade

Inbound cargo at Puerto Cabello:
  • Over 60,000 tons of sugar: 33,000 tons from Brasil for Corporación de Abastecimiento y Servicios Agrícolas (CASA) and 31,000 tons from Ed & F Man for C.A. Azúcar
  • Over 28,000 tons of wheat from Terra World Trade for Molinos Carabobo
  • 25,000 tons of wheat from Quebec, Canadá for Fábrica de Pasta La Especial
  • Over 3,600 tons of chicken, beef and margarine from Brasil for CASA
  • Over 2,000 tons of milk, meat and beans, in 83 containers, from Productos Lácteos La Perfecta S.A., Matadero Nuevo Carnic, Ind Comercial San Martín, Albanisa, Centrolac S.A., Eskimo S.A. y Matadero Central for Corporación Venezolana de Alimentos and Corporación de Abastecimiento y Servicios Agrícolas (CASA)
  • 767 tons of appliances (LED TVs, air conditioners and furnaces) from Lilly & Associate Intl S.A. for its subsidiary in Venezuela
  • Over 27 tons of rice from Brasil for CASA.


Logistics & Transport

IATA is insisting that Venezuela could become isolated, flights cut by 55%
The International Air Transport Association (IATA) is telling the government that if it does not pay its debts the nation could be disconnected from the world, and it asking for it to not only reach agreements but also honor them. Peter Cerda, IATA Vice President for the Americas says: "Five airlines have reached agreements, but only two have received the money agreed upon, not the other three...and this is what most worries the other 19 airlines - the fact that even if agreements are reached there are no guarantees they will receive the amounts agreed upon. In the six months that have passed since the agreement, the government has several times said it would pay and they are still waiting." The CEO of the Venezuelan Association of Airlines (ALAV), Humberto Figuera, has noted seats have been cut down by 55%. "The frequency of flights have been reduced to 207 so far this year, trimming seats to nearly 31,000, which is 44.9% of the flight frequency," Figuera stated. (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/iata-insiste-a-venezuela-que-puede-quedar-aislada.aspx#ixzz39hjDUxdP; El Universal, http://www.eluniversal.com/economia/140807/venezuelan-govt-continues-meeting-with-airlines-to-resume-flights; http://www.eluniversal.com/economia/140806/international-flights-seats-down-almost-55-in-venezuela)


Oil & Energy

Venezuela wants US$ 10 billion for CITGO assets
Petroleos de Venezuela SA (PDVSA), the nation’s state-owned crude producer, said the U.S. oil refining and marketing assets it’s seeking to sell are worth more than US$ 10 billion. “Their value is much, much more,” says Rafael Ramirez, president of PDVSA. He said the company is receiving offers for assets of Houston-based CITGO Petroleum Corp., without providing details on the value of the bids. CITGO owns three refineries capable of handling about 749,000 barrels a day in Louisiana, Texas and Illinois. It also operates the sixth-largest U.S. retail gasoline chain through about 5,900 branded stations. CITGO had sales of US$ 42.3 billion last year and earnings before interest, taxes, depreciation and amortization of US$ 1.8 billion. President Nicolas Maduro is seeking to sell foreign refineries as the nation tries to raise cash, boost oil exports to China and reduce the risk of having assets seized if it loses international lawsuits brought by former oil partners. Contract disputes and expropriations have been filed at the International Center for Settlement of Investment Disputes and the International Chamber of Commerce’s Court of Arbitration by mining and oil companies that operated in the country including Exxon Mobil Corp., Gold Reserve Inc., Phillips 66 and ConocoPhillips. (Bloomberg: http://www.bloomberg.com/news/2014-08-06/venezuela-says-it-wants-10-billion-for-citgo-oil-assets.html)


Commodities

Agribusiness is operating in red due to regulations and takeovers
Price controls and takeovers by the regime over the past 12 years have caused Venezuela's agribusiness industry to operate at a loss and brought on widespread scarcity, says expert Rodrigo Agudo, who calls on the regime to admit "the economic crisis the nation is going through" in order to "rescue domestic production". More in Spanish: (Ultima Hora Digital; http://ultimahoradigital.com/news/noticiaunica.php?id=48683)


Economy & Finance

Maduro in "no rush" to raise gasoline prices; Ramírez says FOREX unification delayed
Economist José Guerra says that "president Maduro is carrying out economic reforms drop by drop because he fears the political impact of taking all steps at the same time", and adds that Maduro is sticking to socialist ideology imposed by the late Hugo Chavez, and respects the more radical political elements within his power base. Maduro now says there is "no rush" to raise domestic gasoline prices as it "is not a necessity", and called for a national debate on the matter: "If it takes a month, ...a year...ten years, then it will be...the nation has resources to continue its development". At the same time Economic Affairs Vice President Rafael Ramírez is now saying that before implementation of a new and unified foreign currency exchange rate takes place “certain conditions must be met such as the issues of liquidity, savings and elements of monetary policy that are underway. When we are ready, we will, we have it in agenda.” Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40502&idc=2; El Universal, http://www.eluniversal.com/economia/140807/economic-adjustments-in-parallel-with-deeper-socialism-in-venezuela; and more in Spanish: El Universal, http://www.eluniversal.com/economia/140808/maduro-afirma-que-no-hay-apuro-para-aumentar-la-gasolina; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro--no-hay-apuro-para-aumentar-la-gasolina.aspx; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/maduro-aseguro-no--tener-apuro--por-aumentar-el-pr.aspx; El Nacional; http://www.el-nacional.com/)

Venezuelan bonds fall; country risk up
Venezuela's country risk has been on the rise since July 24th, and if it now decides to issue bonds abroad to obtain funding, it would have to pay a much higher interest rate than other countries such as Ukraine and the remaining Latin American countries. Venezuela would have to pay an interest rate amounting to 10.34 percent points above the interest rate paid by the US, the country enjoying the lowest loan interest rate. On July 24, the differential stood at 8.8 percentage points. (El Universal, http://www.eluniversal.com/economia/140806/venezuelan-bonds-fall-country-risk-up)

Government is withholding data on 2014 GDP
Neither the Central Bank or the government are publishing any data, even partial, on GDP to date this year. Economic Affairs Vice President Rafael Ramírez says publicly: "I do not handle those numbers...those numbers are provided by the Central Bank".  (Infolatam)

Economy is trapped in recession
In its latest report on the Venezuelan economy, Bank of America Merrill Lynch says the nation is "trapped in recession". It says that despite the regime's decision to withhold economic data; indicators show how serious the situation is with non oil imports down 20% in the first four months of 2014, auto assembly production down 86% production in the first semester and tax revenues down 4.9% during the same period." The report estimates devaluation at an additional 229.8% in 18 months. More in Spanish: (El Nacional; http://www.el-nacional.com/)

China's DAGONG downgrades Venezuela to BB
DAGONG Global Credit Rating Co., Ltd. has downgraded the local and foreign currency sovereign credit ratings of the Bolivarian Republic of Venezuela from BB+ to BB-, each with a negative outlook. "Serious macroeconomic imbalance will drag Venezuela into recession in the short term, and exacerbate the risk of social unrest. Its large fiscal deficit, insufficient international reserves and the pressure of significant devaluation of the local currency contribute to an evident trend of decrease in the local and foreign currency solvency of the government," says Dagong. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2346676&CategoryId=10717)

China’s unlikely partnership with Venezuela
Why does China continue to invest heavily in unstable and cash-strapped Venezuela? The answer, according to Margaret Myers, lies in Beijing’s well-documented determination to enhance its energy security, particularly in the wake of so many financial and political troubles. (The International Relations and Security Network, http://www.isn.ethz.ch/Digital-Library/Articles/Detail/?id=182309)


Politics

HINTERLACES poll says 61% of Venezuelans are "without hope"
The HINTERENLACES polling firm - regarded by many as partial to the government, reports that the world that best describes Venezuelans is "worried" and that  61% of all Venezuelans describe themselves as "without hope", while 38% say they are "confident".  When asked if they are "content" or "bothered", 48% say content, and 49% say bothered. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140807/hinterlaces-dice-que-61-del-pais-esta-preocupado)

2,452 young people are or will be under trial for protesting while on parole; 15 have been remanded home and 123 are in different detention centers or prisons. Twenty-three of those in jail are students. The information was provided by Parlatino Deputy Delsa Solórzano on Wednesday. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40515&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140807/2452-young-people-released-pending-trial-123-detained-in-venezuela)

Intellectuals urge governments to advocate Venezuelans' rights
A group of intellectuals led by Literature Nobel Prize winner Mario Vargas Llosa have appealed to governments that have "amicable relations" with Venezuela to plead for political prisoners and other Venezuelans, whose conditions have been deteriorating. In an open letter published in Spanish daily newspaper El País, the group denounced repression by the government of Nicolás Maduro during student demonstrations, and particularly against the Venezuelan opposition. More precisely, the group denounced the detention of opposition leader Leopoldo López, harassment of journalist Teodoro Petkoff (80), and allegations against deposed opposition deputy María Corina Machado. (El Universal, http://www.eluniversal.com/nacional-y-politica/140806/intellectuals-urge-governments-to-advocate-venezuelans-rights)

Prosecutor releases list of 56 companies investigated for currency fraud
Venezuela's Prosecutor Luisa Ortega Diaz, has released a list of 56 companies that are facing criminal proceedings over fraudulent use of FOREX allocated by the defunct Currency Board (CADIVI). She said managers of these companies must clarify the use of currency awarded by the State, as "several were reported to her office and were under investigation." She later reported that 56 are companies involved and released the list in her Twitter account @lortegadiaz. (AVN, http://www.avn.info.ve/contenido/prosecutor-releases-list-56-companies-investigated-currency-fraud)

Venezuelan FM arrives in Egypt to coordinate aid for Gaza, sending 16 tons of aid and 240,000 barrels of oil
Venezuelan Foreign Minister Elías Jaua described as invaluable the efforts of the Egyptian government to end Israel's military attacks on the Palestinian people in the Gaza Strip. "The efforts of the Egyptian government are invaluable: First of all, in terms of humanitarian protection of the Palestinian people. Secondly, the political and diplomatic efforts made have led to a 72-hour ceasefire," the official noted. He also said Venezuela will send 16 tons of humanitarian aid to the Gaza strip, and that the Venezuelan government has agreed to deliver 240,000 barrels a year to the Palestinian Authority this year and to increase this delivery to one million by 2015. (El Universal, http://www.eluniversal.com/nacional-y-politica/140806/venezuelan-fm-arrives-in-egypt-to-coordinate-aid-for-gaza; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40505&idc=3; and more in Spanish: Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/venezuela-enviar%C3%A1-16-toneladas-ayuda-humanitaria-franja-gaza)


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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