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, January 30, 2015

January 30, 2015


International Trade

 

Cargo that has arrived at Puerto Cabello:

  • Over 16,000 tons of barley malt from PROVENCESA for Empresas Polar
  • Over 9,000 tons of soybean meal from Bunge Latin America for Agro Consorcio Orograin and Seravian C.A.
  • Over 8,000 tons of yellow corn from Bunge Latin America for Agro Consorcio Orograin and Seravian C.A.
  • 1,700 tons of personal care items such as diapers, soap, sanitary napkins, shampoo, conditioner, and hair care products sent by Procter & Gamble Mexico to its local affiliate.
  • Over 669 tons of doors in 40 containers from POSTAR for government agency Servicio Fondo Nacional del Poder Popular (SAFONAPP)
  • Over 377 tons of Scotch whisky in 16 containers from Diageo Brands BV for Corporación Venezolana de Comercio Exterior (CORPOVEX)
  • 268 tons of baby towels from China for Lilly & Associate Int.
  • Over 203 tons of powdered milk from García Hermanos Agroindustrias for Inquinosa Láctea S.A.
  • Over 107 tons of transformers in 4 containers from Colombia for the National Electricity Corporation (CORPOELEC)
  • Over 85 tons of coffee processing equipment for state owned Café Venezuela.
21 ships remain at bay to offload cargo. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-377-toneladas-de-whisky-llegaron-al-puerto-carabobeno-2334654/2015/01/27/487137/; http://www.notitarde.com/La-Costa/Arribaron-mil-700-toneladas-de-articulos-de-aseo-2335812/2015/01/30/487548/)

 

Brazil wants debt repayment in oil

Brazilian government sources have said they are to negotiate with Venezuela to pay some US$ 5 billion debt with oil. The sources estimated it is necessary to “demonetize” the trade relation between Brazil and Venezuela, given the lack of foreign currency of Nicolás Maduro’s regime. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42585&idc=4)

 

Brazil asks Venezuela to change the rules of bilateral beef trade

Brazil has asked Venezuela to expand the duration of licenses granted to beef processors certified to export their products to Venezuela.  Current beef exports from Brazil to Venezuela are made under temporary two year licenses. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/brasil-pide-a-venezuela-cambio-en-las-reglas-del-c.aspx#ixzz3Q72YvaBu; El Nacional; http://www.el-nacional.com/)

 

 

Logistics & Transport

 

American Airlines hopes to repatriate US$ 656 million

American Airlines has reported it has US$ 656 in Venezuela, awaiting repatriation, according to their latest quarterly report. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/negocios/empresas/american-airlines-espera-poder-repatriar--656-mill.aspx#ixzz3QCpPAGbf)

 

 

Oil & Energy

 

Dominican Republic paid off 98.5% of its total debt to PDVSA, by paying only 48%

The Dominican Republic has paid off 98.5% of its debt to. Dominican Finance Minister Simón Lizardo announced that Venezuela was paid US$ 1.933 billion which is 48% of that nation's total debt of US$ 4.027 billion. By taking advantage of the financial benefits which are part of PETROCARIBE, the Dominican Republic saved 52% of the total bill, and its debt to PDVSA is now merely US$ 96.5 million. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/republica-dominicana-paga-el-98-5--de-su-deuda-con.aspx#ixzz3QIo17ydE; El Nuevo Diario, República Dominicana, http://www.elnuevodiario.com.do/app/article.aspx?id=409250; 2001, http://www.2001.com.ve/en-la-agenda/89391/gobierno-reduce-a-republica-dominicana-deuda-petrolera.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/republica-dominicana-paga-con-bonos-el-98-5-de-su-.aspx)

 

CITGO offering US$1.5 billion in bonds, 10-11% yield

CITGO Petroleum, a unit of Venezuela's refining company in the United States, is offering US$ 1.5 billion in bonds maturing in 2020 with a 10% to 11% yield, according to sources consulted by Thomson Reuters IFR. The bond is initially offering a pick-up of up to 100 basis points over a US$1 billion, 5-year term loan that is being launched jointly and marketed with price talk of about 800 basis points over Libor, for a yield of around 10%, the sources said. CITGO and Deutsche Bank, which is managing the transaction, last week announced in New York some details of the US$ 2.5 billion credit package that will raise money for CITGO's parent company, state-run PDVSA, amid falling crude oil prices and difficulties accessing foreign credit. (Reuters, http://www.reuters.com/article/2015/01/28/citgo-pete-debt-idUSL1N0V71QT20150128; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42578&idc=2)

 

US$ 10 billion added income expected from raising domestic gasoline prices

Government party legislator Ramón Lobo, Vice President of the Administration and Finance Committee at the National Assembly says adjusting domestic gasoline prices could bring in an additional US$ 10 billion to government coffers.  More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/-10-000-millones-esperan-por-el-alza-de-la-gasolin.aspx#ixzz3QCozwiZx)

 

 

Commodities

 

Hospitals' association: 92.4% of medical supplies are imported, debt to drug industry up to US$ 3 billion

Cristino García, Executive Director of the Venezuelan Association of Private and Public Hospitals (AVCH), has welcomed a decree providing for simplification of procedures to import medical supplies. He says upply issues had to do with the fact that "92.4% of supplies are imported", and added that the debt accrued to foreign providers of medical supplies amounts to US$ 379 million, while the debt owed to the drug industry totals US$ 3 billion. (El Universal, http://www.eluniversal.com/economia/150129/hospitals-association-924-of-medical-supplies-are-imported)

 

 

Economy & Finance

 

Finance Ministry fine tuning new exchange system

Finance Minister General Rodolfo Marco Torres has met with private bank representatives to fine tune a new foreign exchange system the government plans to implement this year. After another meeting with financial market operators it was reported the new system will operate through the government's Bicentennial Public Stock Exchange and will be supervised by Venezuela's counterpart to the Securities & Exchange Commission (SEC). Representatives of the market operators association said "the system for this new market will be a transparent process and will speed up operations, clearing away uncertainties" Jorge Roig, President of Venezuela's main business federation (FEDECAMARAS) says "The most important part of what President Maduro has said, and if they get it right it could work, is to free up the exchange system to other economic players in the country" More in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/finanzas-define-con-la-banca-nuevo-esquema-cambiar.aspx#ixzz3Q70gvnS6; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ejecutivo-afina-con-los-bancos-el-nuevo-sistema-ca.aspx; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/roig-nuevo-esquema-cambiario-podria-funcionar-sati.aspx#ixzz3QCrIgZLi; El Universal, http://www.eluniversal.com/economia/150130/mercado-en-bolsa-bicentenaria; El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/gobierno-se-reunio-con-las-casas-de-bolsa.aspx)

 

Venezuela has the lowest international reserves among OPEC member countries, according to data from The Economist’s Intelligence Unit. Venezuela had US$ 23 billion in 2014 in reserves, followed by Angola and Nigeria, with US$ 28 and US$ 37 billion, respectively. The Venezuelan Central Bank (BCV) now reports the country's reserves are going down US$ 288.5 million a day on average during January to a little over US$ 20 billion. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42579&idc=2)

 

Poverty level in Venezuela reaches 48.4% of the population

A study conducted by the three main universities in Caracas - Venezuela's Central University, the Andrés Bello Catholic University and the Simón Bolívar University - shows poverty here has risen to 48.4% of all homes. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pobreza-en-venezuela-llega-a-48-4-de-los-hogares-s.aspx#ixzz3QIpMtW00)

 

Rationing card may soon go into effect

President Nicolás Maduro says he has given precise orders to Food Security and Sovereignty Vice President General Carlos Osorio and Agriculture and Lands Minister Yván Gil “to immediately set the secure supply system, fingerprint scanners and secure supply cards,” he said. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42568&idc=3)

 

The high price paid for errors in Venezuela

Hunger and death are spreading across Venezuela because of a political project that was supposed to represent a panacea for the poor, and rather ended up being a factory of poverty, misery and marginality. One way to measure the situation is paying attention to the voices of agrifood specialists calling for an emergency to be decreed in the sector; or listening to government spokesmen such as Food Security Regulator General Carlos Osorio, who has admitted that food reserves will only last two and a half months, an extremely serious claim when it is clear that there is no guarantee of enough production to replenish shelves everywhere in the country with food products, or the necessary foreign currency to import them. The magnitude of the disinvestment problem in the national productive system, and hence its depletion and dependence on imports, is that inventories of medical-surgical equipment and materials stocking the public and private healthcare network without inventories have run out already, said María Yánez, head of the Network of Scientific and Medical Societies of Venezuela, this week. But, the debacle of the productive sector, as a result of 16 years of sustained expropriations of lands, properties and businesses of all types and sectors, as well as all the violations to the rule of law and economic freedoms, is not only confined to food and pharmaceutical products. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2371611&CategoryId=10717)

 

 

Politics and International Affairs

 

Defense Minister authorizes the military to use lethal force in "disturbances", HRW denounces Venezuela

General Vladimir Padrino, Minister of Defense has issued a resolution which authorizes military staff to break up protests and use “potentially lethal force, by use of a firearm or any other potentially lethal weapon,” as a last resource to “prevent riots, support the legitimate authorities and reject any attack, facing it immediately and with the necessary means.” In its annual Human Rights Watch has denounced the Venezuelan government for the excessive use of force against unarmed demonstrators during protests in 2014. 40 civilians were killed and mass arrests were carried out, as they were deprived of due process. HRW Executive Director Kenneth Roth says "Human rights continue deteriorating as the economy continues to sink". Representative Ileana Ros-Lehtinen, Chairperson of the US House of Representatives Foreign Relations Committee calls the military order "Another sign of Maduro's desperation". (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42582&idc=1; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/150130/hrw-senalo-al-gobierno-por-el-uso-excesivo-de-la-fuerza; and Ileana Ros-Lehtinen: @RosLehtinen)

 

Is the Salazar scandal the proof that Venezuela has finally become a narco-state?

The Spanish newspaper ABC and Miami's Nuevo Herald have reported that an ex-bodyguard of Diosdado Cabello, the speaker of the Venezuelan parliament, has provided information to U.S. authorities implicating his former boss as a kingpin in the drug trade. Prior to turning state’s witness, Leamsy Salazar, a well-connected officer within the Venezuelan armed forces, spent over a decade as the head of Hugo Chávez’s personal security detail and sometime personal assistant. Following the death of Chávez in early 2013, Salazar was reassigned to Cabello, whom he is prepared to depict in court, according to ABC, as the capo di tutti capi of the “Soles” narcotics cartel, named for the sun emblem embroidered on high-ranking Venezuelan military uniforms, an alleged drug trading organization nested inside the armed forces.  Emili J. Blasco, author of the ABC report, quotes Salazar as saying Chávez’ son and the son of the Cuban Ambassador to Venezuela used PDVSA planes to transport drug to Cuba. Outside sources seem to back at least the overall thrust of the story. The Wall Street Journal confirmed that Salazar had been in talks with U.S. authorities for months. William Brownfield, a former U.S. ambassador to Venezuela who now heads the Department of State’s anti-drug unit, said the ABC narrative was “not inconsistent” with evidence of high-level Venezuelan government complicity with cartels. The regime, which quickly confirmed Salazar’s defection, otherwise reacted to the accusations with predictable defensiveness. Cabello has threatened to sue ABC and Venezuelan media that have printed the story, claiming that no proof of the accusations has been presented. (Foreign Policy, https://foreignpolicy.com/2015/01/28/is-this-scandal-the-proof-that-venezuela-has-finally-become-a-narco-state/; Reuters, http://www.reuters.com/article/2015/01/28/us-venezuela-cabello-idUSKBN0L102P20150128; El Universal, http://www.eluniversal.com/nacional-y-politica/150129/cabello-rejects-unfounded-accusations-intends-to-sue-media-outlets; http://www.eluniversal.com/nacional-y-politica/150128/cabello-salazar-will-have-to-prove-what-he-said; http://www.eluniversal.com/nacional-y-politica/150128/congress-vp-us-embassy-offered-me-money-to-betray-chavez; http://www.eluniversal.com/nacional-y-politica/150128/president-maduro-defends-diosdado-cabello-from-smear-campaign; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42569&idc=1; http://www.veneconomy.com/site/index.asp?ids=44&idt=42580&idc=1; http://www.veneconomy.com/site/index.asp?ids=44&idt=42570&idc=1; and more in Spanish: Infolatam, http://www.infolatam.com/2015/01/29/cabello-dice-que-demandara-diario-abc-y-varios-medios-nacionales)

 

Maduro says he will have the chance to speak with Obama in Panama

President Nicolás Maduro said in Costa Rica that he would head for Panama on April 10-11 to attend the Summit of the Americas. "(US President Barack) Obama will be there; we surely will have the opportunity to exchange views." He highlighted the "courageous step" taken by President Obama to restore relations with Cuba. "We will exchange, honestly and respectfully, views about future relations (of the United States) with Latin America and the Caribbean," Maduro said. (El Universal, http://www.eluniversal.com/nacional-y-politica/150129/maduro-we-will-have-the-chance-to-speak-with-obama-in-panama)

 

Freedom House sees a growing threat against democracy, with claims the democratic model is experiencing its worst danger in 25 years due to authoritarianism and terrorism in its annual report on freedoms. In the case of Venezuela, it decried a substantial increase of political prisoners who are in many cases accused of terrorism as a “justification for new repressive measures without any evidence”. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42583&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/150128/venezuela-regarded-as-a-model-of-political-and-economic-dysfunction)

 

Venezuela says "Colombia is an accomplice to unfriendly actions", but Maduro meets with Santos

Venezuela´s Foreign Minister has publicly decried that her counterpart in Colombia has supported positions it claims go against "Venezuelan democracy" in what it termed "a dangerous regression" in bilateral relations. The statement came after Colombia's Foreign Ministry expressed support for former Colombian President Andrés Pastrana - whom President Maduro accused of being financed by drug money - and called Leopoldo López a political prisoner".  Subsequently, President Maduro met in Costa Rica for 30 minutes with Colombian President Juan Manuel Santos. He also met with Brazilian President Dilma Rousseff. More in Spanish:  (El Nacional; http://www.el-nacional.com/; AVN; http://www.avn.info.ve/contenido/presidente-maduro-se-reunió-sus-hom1ólogos-brasil-y-colombia)

 

Reactions continue to Venezuela's mistreatment of the former presidents of Colombia and Chile

Reactions continue to the treatment of the former presidents of Colombia and Chile, Andrés Pastrana and Sebastián Piñera by the Venezuelan government. Opposition parliamentarians of both nations have demanded that their governments take a firm stance with Venezuelan President Nicolás Maduro. In Chile, legislators from both major parties asked President Michelle Bachelet to file "a formal complaint" with Venezuela for preventing Piñera from visiting opposition leader Leopoldo López in a military jail and for calling Piñera all sorts of names for participating in a forum on democracy hosted by ousted deputy María Corina Machado. The Conservative Party of Colombia asked President Juan Manuel Santos to confront his Venezuelan counterpart over the rights of five million Colombian residents who are being hurt by the current crisis in Venezuela. They also asked Santos to go to the OAS and call in the InterAmerican Democratic Charter. For his part, OAS Secretary General José Miguel Insulza welcomed Pastrana and Piñera "to the club of those insulted by Venezuelan presidents" and added that "it seems anyone who says anything concerning Venezuela is to be condemned and that seems to be idiotic". He added "the main problem here is human rights.. and the atmosphere for a dialogue would improve a lot if Leopoldo López and the others imprisoned were to be set free." (El Universal, http://www.eluniversal.com/nacional-y-politica/150129/dissenters-request-firm-stance-from-bachelet-santos-vis-a-vis-venezuel; http://www.eluniversal.com/nacional-y-politica/150128/lopez-asks-pastrana-pinera-to-keep-on-supporting-the-venezuelan-endeav; and more in Spanish: 6to Poder, http://www.6topoderweb.com/2.0/1/9386/insulza-considera-una-idiotez-condenar-a-quien-diga-algo-contra-venezuela)

 

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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