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, September 26, 2014

September 26, 2014


International Trade

 
New cargo arrivals reported at Puerto Cabello

  • Over 2,434 tons of beef, milk and beans from Centrolac S.A., Eskimo S.A., Albalinisa, Matadero Nuevo Carnic, Industria Comercial San Martín and Matadero Central for Corporación de Abastecimiento y Servicios Agrícolas (CASA)
  • Over 1,000 tons of personal care products (shampoo, conditioner, soap and sanitary towels) from Mexico for Procter & Gamble
  • Also shoes, clothing and auto parts
23 ships remain at bay awaiting dock assignment, 3 of them with white and yellow corn and other wheat, sugar and rice. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-mil-toneladas-de-articulos-de-aseo-personal-2239720/2014/09/25/356239)

 

 
Logistics & Transport

 
Flight frequency is down 50% from last year

According to a report by the Venezuelan Airline Association (ALAV) international airlines are providing 50% fewer flights than in 2013 to travelers here to flight reductions and downsized equipment. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/aerolineas-con-50--menos-frecuencias-entre-2013-y-.aspx#ixzz3EPtXIDXK; El Universal, http://www.eluniversal.com/economia/140925/torres-lufthansa-ratifico-compromiso-de-normalizar-operaciones)

 
 

Oil & Energy

 
Fuel smuggling costs PDVSA around US$ 3 billion a year

PDVSA President Eulogio del Pino says around 50 to 100,000 barrels per day are smuggled out of the country, at a yearly cost of U$ 3 billion to PDVSA. He said they are investigating whether there are "points" within PDVSA causing such a volume of smuggling. More in Spanish: (PDVSA, http://www.pdvsa.com/)

 

Venezuela suffers another blackout

Another blackout hit various states across Venezuela on Thursday in an irritation for locals and embarrassment for President Nicolas Maduro's government which runs the electricity sector. The nation has been suffering increasing power cuts in recent years which critics jump on as evidence of mismanagement by the socialist authorities. The government has in the past often blamed saboteurs for the cuts, but Electricity Minister Jesse Chacon was quick to attribute the latest blackout to problems at generating plants in the western Andean region of Venezuela. (Reuters, http://www.reuters.com/article/2014/09/25/venezuela-blackout-idUSL2N0RQ25Y20140925)

 

PDVSA asset sales may shield Venezuela from possible seizures

State-run oil company PDVSA's move to sell units raises questions whether Venezuela wants to reduce international exposure to avoid potential asset grabs in the event companies win arbitration cases against the country. Latin America's leading crude producer is seeking to sell its major U.S refining unit CITGO Petroleum Corp, as well as stakes in the HOVENSA refinery in the U.S. Virgin Islands, the Chalmette refinery in Louisiana, and a network of refineries in Sweden, England and Scotland. The socialist government has shrouded the potential deals in secrecy, leaving analysts and industry players scrambling to piece together a rationale for the surprise divestment. (Reuters, http://www.reuters.com/article/2014/09/24/venezuela-pdvsa-idUSL1N0RK1BQ20140924)

 

Paraguaná refining complex operates at 75% of its capacity

The Paraguaná Refining Complex is currently processing 713,000 crude oil barrels per day (bpd), and operates at 75% of its installed capacity, according to an internal document of state-run oil holding PDVSA. The CRP operation rate is higher than that recorded in May, when it processed 590,000 bpd, or 62% of its capacity. The CRP is slowly recovering its regular production levels, after being heavily hit by a serious event in 2012, which caused a plunge in its production. (El Universal, http://www.eluniversal.com/economia/140925/paraguana-refining-complex-operates-at-75-of-its-capacity)

 


Economy & Finance

 
Central Bank adjusts FOREX policy - analysts see implicit devaluation, more inflation

State oil company PDVSA will be allowed to sell dollars for local currency at the most advantageous of the country's three official exchange rates, the Central Bank said on Thursday, a move that could help ease the company's cash-flow problems. PDVSA can now tap the SICAD II rate of around 50 bolivars per dollar when it sells to state development fund FONDEN, removing a previous regulation that gave it access to that rate only when it sold dollars for oilfield investments. That would help liquidity on the SICAD II market, according to economist Asdrubal Oliveros of local consultancy ECOANALITICA. Analysts believe the government has discarded FOREX unification and has decided to make some adjustments that will help it increase income, as well as FOREX supply within the SICAD 2 system. Although the decision could reduce pressure on the FOREX market it implies devaluation and more inflation if the Central Bank decides to place FONDEN funds into SICAD 2. (Reuters, http://www.reuters.com/article/2014/09/25/venezuela-forex-idUSL2N0RQ1J120140925; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/gobierno-nacional-ajusta-su-estrategia-cambiaria.aspx#ixzz3EPt4XmIL)

 

Venezuela bonds rally as three PDVSA exchange rates permitted

Venezuelan bonds rose to one-week high after the government said it would let state-owned oil company Petroleos de Venezuela, S.A. sell dollars at a more attractive level. The nation’s benchmark dollar bonds due in 2027 increased 0.92 cent to 73.25 cents on the dollar today at 3:04 p.m. in New York, the highest level on a closing basis since Sept. 15. The extra yield investors demand to own Venezuelan bonds over U.S. Treasuries narrowed 0.24 percentage point to 12.87 percentage points, according to JPMorgan Chase & Co indexes.  (Bloomberg, http://www.bloomberg.com/news/2014-09-25/venezuela-bonds-rally-as-three-pdvsa-exchange-rates-permitted.html)

 

Hedge funds circling Venezuela as yields top 15%

Hedge funds are stepping in to fill a vacuum in Venezuela’s bonds as deepening concern the nation will default triggers an investor exodus. The debt, which suffered the worst selloff in emerging markets as Standard & Poor’s cut the country’s rating to CCC+ and predicted at least a 50% chance of non-payment in two years, has become increasingly attractive to firms including Greylock Capital Management LLC and Callaway Capital Management LLC. The government notes now yield 15.7% on average, the most in developing nations, while bonds from the state-owned oil producer are also among the cheapest dollar-denominated corporate securities in the world. (Bloomberg, http://www.bloomberg.com/news/2014-09-23/hedge-funds-circling-venezuela-as-yields-top-15-andes-credit.html)

 

Government adjusts FOREX rate to VEB 12 per US$ at SICAD 1

The foreign exchange rate of the Ancillary Foreign Currency Administration System (SICAD 1) has been adjusted by the government from VEB 11.70 - 12 per US$. For several weeks the National Foreign Trade Center (CENCOEX) had not made any change to the FOREX rate quoted at VEB 11 per US$. However, in the last three sale auctions the rate has been sliding, which means the Executive Office has been making several moderate adjustments. Some firms estimate that SICAD 1 FOREX rate is likely to hit VEB 15 per US$. Although this would translate into more bolivars to bridge the fiscal gap, analysts believe the move would have little impact. (El Universal, http://www.eluniversal.com/economia/140924/venezuelan-govt-adjusts-forex-rate-to-veb-12-per-usd-at-sicad-1)

 

Venezuela-EXXON arbitration ruling due in days

A World Bank arbitration tribunal could rule in days that Venezuela must pay between US$ 700 million and US$ 1.2 billion to EXXON MOBIL Corp to compensate for a 2007 nationalization. The International Center for Settlement of Investment Disputes (ICSID), which is deciding the case, must issue a final ruling by the end of October to meet a 90-day deadline following the close of proceedings on July 28. The court can also request an extension of 90 days, which would leave the final decision for the end of January. (Reuters, http://www.reuters.com/article/2014/09/25/venezuela-exxon-mobil-idUSL2N0RQ19420140925; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41208&idc=4)

 

Venezuela opens gold vault for BOFA analyst to count bars

Francisco Rodriguez, a Venezuelan-born economist with Bank of America, was at a routine meeting with Venezuelan central bank officials last week when he sprung an unusual question on them: Can you show me your gold? With the government’s bonds sinking toward prices that indicate investors are bracing for the possibility of default, the country’s US$ 15 billion of gold bars are crucial to ensuring debt payments are met. His first impression once inside the vaults? Those bars don’t take up a lot of room. He said he started counting frantically in his head, summing up figures scrawled out on signs near each pile of the metal. By his quick math, the gold was all there. Gold accounts for about 71% of Venezuela’s US$ 21.4 billion of foreign reserves, according to the World Gold Council. About US$ 13 billion of the gold is held at the central bank in downtown Caracas, with another US$ 2 billion at the Bank of England, according to Rodriguez. Those gold assets have grown in importance as Venezuela’s overall foreign reserves plunged 34% percent in the past five years, the result largely of a drain of its more liquid assets. In a Sept. 23 note to clients, Rodriguez said the “rare” look at the gold was “largely symbolic yet reassuring.” “It’s not that the majority of the people doubt that the gold is there,” he says. “But it’s one of these things that linger, something that’s nagging you and makes you wonder: What if it’s not?  (Bloomberg: http://www.bloomberg.com/news/2014-09-24/bofa-peeks-inside-venezuela-s-gold-valut-for-closer-look.html)

 

Venezuela to enforce Fair Prices Law with military-civic force, threatens 10-12 prison for hoarding, speculation

Price Superintendent Andrés Eloy Méndez says the government will apply the Fair Price Law - which bans profits above 30% - "with civilian-military force" and "people's inspectors in the streets". He also said: "I have decided 10-12 years prison for whoever hoards or speculates". More in Spanish: (Infolatam; and more in Spanish: El Universal, http://www.eluniversal.com/economia/140925/mendez-insiste-en-penas-de-10-a-12-anos-por-acaparamiento-o-especulaci)

 

Controversial fingerprinting machines rolled out in some Venezuelan stores

The Venezuelan government has started to fingerprint shoppers at some state-run supermarkets, in a plan to combat food scarcity which has been derided by some consumers weary of shortages. Long queues are a ubiquitous sight in shops, while Venezuelans often have to visit several stores to find what they are looking for or settle for substitutes, and friends share tips about where scarce products can be found. (Reuters, http://www.reuters.com/article/2014/09/25/venezuela-food-idUSL2N0RQ1U620140925)

 
 

Politics

 
Inter-Parliamentary Union to travel to Venezuela to address "flagrant" HR violations

A delegation of the Inter-Parliamentary Union (IPU) will travel to Venezuela in October to talk with Venezuelan authorities about alleged violation of democratic rights and harassment of dissenting parliamentarians. The President of the Human Rights Committee of the IPU, Chilean senator Juan Pablo Letelier, explained that the arrival of the mission was conditioned by Venezuelan authorities, who have not approved the visit yet. He also said that Human Rights violations in Venezuela were "flagrant". (El Universal, http://www.eluniversal.com/nacional-y-politica/140925/inter-parliamentary-union-to-travel-to-venezuela-to-address-hr-violati)

 

International Criminal Court in "preliminary examination" of human rights accusations against regime

Bolivian legislator Adrián Oliva says the Prosecutor of the International Criminal Court in The Hague is conducting a "preliminary examination" of reports presented to the Court by over 300 legislators from Latin America and Spain on human rights abuses by the regime of Nicolás Maduro in Venezuela. The Court will determine whether the facts reported come under its jurisdiction. In addition to a report on the events of February here, the accusers are preparing two more reports on "informal armed groups in Venezuela", and "the absence of due process and judicial independence". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140925/fiscal-de-corte-internacional-vera-hechos-de-venezuela)

 

Obama signals Leopoldo López in plea for release of political prisoners, government rep terms it "aggression"

During his speech at the UN’s Clinton Global Initiative, US President Barack Obama asked for the release of all political prisoners globally and specifically mentioned Venezuela’s Leopoldo López. “They deserve to be free. They must be released,” he said. Roy Daza, a pro regime Venezuelan delegate to the Latin American Parliament (PARLATINO) retorted that the request by Obama, is a part of his Administration's aggressions of that Administration against the Venezuelan people. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41191&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140923/obama-calls-for-release-of-venezuelan-dissenter-lopez; and AVN, http://www.avn.info.ve/contenido/daza-estimates-aggression-obama039s-request-release-lopez)

 

Maduro claims Venezuela has met almost all UN goals for the Millennium, pledges US$ 5 million to fight Ebola

Speaking for the first time at the 69th UN General Assembly, President Nicolás Maduro claimed Venezuela has met almost all of the UN's goals for the Millennium, called for the end to US sanctions on Cuba, for "decolonizing" Puerto Rico, and releasing a jailed Puerto Rican independence activist, supported Argentina's attack on speculative funds, said the UN has permanently betrayed its own principles, and called for reorganizing the institution in order to give emerging nations a larger voice. He also announced that Venezuela would provide US$ 5 million to the funds created to support the fight against the Ebola virus in Africa. (El Universal, http://www.eluniversal.com/nacional-y-politica/140925/president-maduro-calls-for-un-democratic-reform; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2353750&CategoryId=10717; and more in Spanish: Infolatam)

 

Maduro pledges support to fuel subsidies for Bronx poor, meets with World Jewish Council

During his stay in New York, President Nicolás Maduro has said he will strengthen support for the Citizens Energy Corporation, headed by Joseph Kennedy II, which provides subsidized fuel for the poor in the Puerto Rican neighborhood of the Bronx. Kennedy said almost a million families have benefitted from subsidies provided by PDVSA through CITGO, for 10 years. He also met with the Presidents of Iran, Colombia and the Dominican Republic; as well as with leaders of the World Jewish Council. (Reuters, http://www.reuters.com/article/2014/09/24/venezuela-citgo-idUSL2N0RP0ME20140924; El Universal, http://www.eluniversal.com/economia/140925/not-selling-citgo-could-bring-political-benefits-analysts-reckon; http://www.eluniversal.com/economia/140924/president-maduro-venezuela-is-to-keep-citgo; and more in Spanish: PDVSA, http://www.pdvsa.com/; Noticias Venezuela, http://noticiasvenezuela.info/2014/09/pdvsa-incrementara-programa-de-calefaccion-en-comunidades-del-bronx/; Notitarde, http://www.notitarde.com/Economia/Maduro-descarta-la-venta-de-Citgo/2014/09/23/355938; AVN; http://www.avn.info.ve/contenido/joseph-kennedy-agradece-venezuela-continuación-ayuda-para-calefacción-más-pobres-eeuu; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/presidente-nicolás-maduro-se-reunió-congreso-mundial-judío-nueva-york)

 

Torrealba elected Executive Secretary of the opposition Democratic Unity Conference, seeks renewed dialogue

Jesús "Chuo" Torrealba, a popular educator, journalist and TV personality, who created a group called "Radar of the Barrios", which focuses on the problems of Venezuela's extensive slums, has been unanimously elected Executive Secretary of the Democratic Unity Conference, which includes almost all of Venezuela's opposition. He said the united opposition is interested in renewed talks with the government. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41207&idc=1; Reuters, http://www.reuters.com/article/2014/09/24/us-venezuela-opposition-idUSKCN0HJ20820140924; El Universal, http://www.eluniversal.com/nacional-y-politica/140924/torrealba-alliances-between-political-community-leaderships-are-requir; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2353704&CategoryId=10717; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/140925/torrealba-en-la-unidad-nos-interesa-revivir-el-dialogo)

 

Killers of Venezuelan beauty queen Monica Spear jailed

A court in Venezuela has sentenced three men to lengthy jail sentences for the killing of Venezuelan beauty queen Monica Spear in January. The three had pleaded guilty. Spear, 29, and her British partner, Thomas Berry, were shot dead in January in front of their five-year-old daughter during a roadside robbery. Prosecutors said the three men were part of a larger gang which targeted motorists along a highway leading from Valencia to Puerto Cabello. The sentences for the three men range between 24 and 26 years in jail. The murder of the popular beauty queen, who was crowned Miss Venezuela in 2004, prompted demonstrations against the country's high crime rate. (BBC)

 
 
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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