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, February 6, 2015

February 06, 2015

International Trade


Cargo that has arrived at Puerto Cabello:

  • Over 1,767 tons of milk from Sancor Cooperativas Unidas for state agency CASA
  • 612 tons of sunflower and safflower from Bunge Argentina for state agency CASA
  • Over 524 tons of appliances from Honour Lane Shipping for Lilly & Associate
  • Over 370 tons of cheese and unsalted butter from Uruguay for General de Alimentos Nisa S.A., and the Venezuelan Foreign Trade Corporation (CORPOVEX). 
  • Over 365 tons of bond paper from Int Paper Expodoca for state owned INVEPAL
  • 154 tons of transformers and other equipment for power distribution from Uniled Conveyor Corp. for the National Electricity Corporation (CORPOELEC)
24 ships remain at bay to offload cargo. More in Spanish: (Notitarde;; Notitarde;



Logistics & Transport


Air fares now must be paid for in US$ dollars

General Giuseppe Yoffreda, Minister for Aquatic and Air Transportation, has advised international airlines operating here that they will receive no requests for FOREX reimbursement in 2015, according to a source in the industry - which indicates they will have to sell inventory in US dollars. The Venezuelan government still owes international airlines around US$ 3.6 billion for previous operations. More in Spanish: (El Nacional;


International air cargo carriers to pay fees in US$ dollars, according to a resolution by the Ministry for Aquatic and Air Transportation. More in Spanish: (El Mundo,; AVN,éronaves-extranjeras-deberán-pagar-divisas-prestar-servicios-país)



Oil & Energy


Venezuela ends Algeria oil imports due to logistical, price issues

State oil company PDVSA has stopped purchases of Algerian light crude to blend with its extra-heavy oil because of technical problems and disagreements with the seller, sources said. The decision ends a cost-saving effort launched in October to use Algerian Saharan Blend instead of costlier heavy naphtha as a diluent for domestic Orinoco Belt crude, the oil that accounts for about 40 percent of Venezuela's output. (Reuters,


Refiner CITGO sweetens terms on US$ 2.5 billion financing package

Venezuela's U.S. refining unit CITGO was forced to sweeten the terms of a US$ 2.5 billion financing package aimed at pumping new cash into the coffers of state-owned oil company PDVSA. Skepticism over the ultimate goal of the transaction are forcing Citgo to offer investors a yield close to 12%, much higher than originally anticipated, according to IFR. (Reuters,





40% scarcity in spare parts for agricultural machinery

Erich Hartkopf, head of the association which represents spare parts distributors for heavy equipment and agricultural machinery, reports there is 40% scarcity in spare parts for agriculture. More in Spanish: (Ultima Hora Digital;


Chemical, petrochemical sector has raw materials for two months

Juan Pablo Olalquiaga, president of the Chemical and Petrochemical Industry Association (ASOQUIM) reports that the government owes the industry around US$ 350 million, out of which US$ 250 million are due since 2013. He says price controls have adversely affected household products due their low marketing price and companies "can no longer produce them." (El Universal,


The US$ 755 condom pack is the latest indignity in Venezuela

Venezuelans now face a new indignity: Condoms are hard to find and nearly impossible to afford. The impact of reduced access to contraceptives is far graver since Venezuela has one of South America’s highest rates of HIV infection and teenage pregnancy.  (Bloomberg,



Economy & Finance


MORGAN STANLEY: Venezuela: Dealing with the dollar deficit

A credit event can be avoided in 2015… We look closely into the balance of payments to assess the risks of a potential crisis and conclude that although lower oil prices are likely to push the current account into deficit and add to already high external financing needs, the public sector has assets abroad that, if used, could be enough to bridge the gap this drawing down external assets: Drawing down external assets could help to avert a crisis in the balance of payments, but provides little market relief, as: i) The strategy provides no solution to the underlying economic problems and adds evidence that Venezuela is running out of alternatives while adding to the already large imbalances that would continue to weigh in 2016; and ii) Lack of transparency on official data raises questions about asset valuations and liquidity and the government’s real ability to use these to cover hard currency needs.


New exchange system ready to be launched

The National Association of Stock Brokers (ANOV) stressed on Wednesday that the operability of the foreign exchange system soon to be implemented is secured. The National Association of Stock Brokers (ANOV) stressed on Wednesday that the operability of the foreign exchange system soon to be implemented is secured. Exchange operators have reached an agreement with authorities to guarantee the system's operations and the technological platform - the same one used for the SICAD II system - is ready and proven in real time. The exchange rate fluctuates freely as a result of supply and demand. In principle it has been agreed that transactions above US$ 1,000 will go though the official public exchange, while those under that amount will be handled by exchange firms. Companies will be able to legally register transactions within the system on their books and apply them to the sale of goods and services, according to financial sources. (El Universal,; and more in Spanish: El Universal,; El Mundo,


Venezuela bondholders haunted by Chavez-era legal claims

Bond investors wondering whether President Nicolas Maduro will be able to scrounge up enough cash to repay them are starting to realize they’re not alone. Last week, a Paris court ordered Venezuela to pay Gold Reserve Inc. US$ 746 million to compensate the company for mining permits that were canceled in 2008 by then-President Hugo Chavez. If Venezuela fails to pay within 30 days and doesn’t appeal, the nation would violate debt agreements that require it to honor judgments exceeding US$ 100 million, according to Barclays. The ruling is part of what Scotiabank estimates may be as much as US$ 20 billion in legal claims against Venezuela that are likely to make Maduro’s efforts to stave off a default even more difficult. (Bloomberg,


Gold Reserve says open to settlement of US$ 747 million Venezuela case

Gold Reserve is in talks with Venezuela about an arbitration award that granted the company more than US$ 740 million and is open to a settlement, its president said on Wednesday. The award, which bears interest of LIBOR plus 2 percent, now stands at nearly US$ 747 million, U.S.-based Gold Reserve President Doug Belanger said in an email. Belanger added that Venezuela had in the past indicated it was eager to settle. (Reuters,


Seven charts show why Venezuela's economy is a basket case

Venezuela's economy is set to shrink by 7% in 2015, according to the International Monetary Fund's (IMF) latest figures from last month. The IMF cannot see any improvement this year. Venezuela stopped publishing its GDP figures in 2013 but the problems are clear in the long queues for food and regular electricity blackouts. Why is the Venezuelan economy doing so badly? Oil exports account for 95% of Venezuela's exports. But oil prices have fallen from US$ 112.36 a barrel in June 2014 to US$ 52.99 a barrel in January 2015. At the higher price, Venezuela's daily output of two million barrels of crude oil would have been worth US$ 82 billion a year. Now it is worth US$ 38.6 billion. The country spent US$ 60.5 billion importing goods and services yet the state owned oil company, PDVSA, received some US$ 39 billion for its [oil] exports. (The Telegraph,



Politics and International Affairs


Government prioritizes radicalization over reform, 20 businessmen arrested this year

On February 1st the president, Nicolás Maduro, announced the arrest of several directors and managers of a big chain of pharmacies, FARMATODO, and other businesses, accused of exacerbating long shopping lines in what he calls "an economic war" underway. Jorge Roig, President of the nation's largest business organization (FEDECÁMARAS) says the regime is improvising because they are desperate and has called jailed businessmen political prisoners. At the same time, Defense Minister General Vladimir Padrino, issued a resolution outlining rules of engagement for the military in dealing with violent demonstrations, including the use of deadly force, although the armed forces (with the exception of the national guard) are constitutionally barred from these type of public order responsibilities. These developments suggest that the already-critical economic situation is set to worsen further as the government dismisses calls for reform and is instead threatening to radicalize the existing economic model further. With a parliamentary election due before the end of the year, that bodes ill for the government's prospects. The business environment will continue to weaken amid concerns over nationalization, prompting further capital flight. (The Economist Intelligence Unit,; Reuters,; Veneconomy,; El Universal, and more in Spanish: El Nacional;


Maduro seeks UNASUR and CELAC mediation, US tells him he can communicate "directly"

President Nicolas Maduro has asked the Secretary General of the Union of South American Nations (UNASUR), Ernesto Samper to mediate between Venezuela and the US. Maduro called on the US president to "rectify and stop in time the coup plan (that would see) the destruction of Venezuela." Samper claims that the fact that the United States revoked his visa 20 years ago does not preclude him from undertaking an "institutional" endeavor to ease tensions between Caracas and Washington - but the US Department of State quickly urged the Venezuelan government to communicate "directly" with Washington through diplomatic channels, and said "we have received no such request from UNASUR, nor do we expect one". Maduro also spoke with Ecuadorean President Rafael Correa, who is the president pro-tempore of the Community of Latin American and Caribbean States (CELAC), and Ecuadorian Foreign Minister Ricardo Patiño, as pro-tempore president of CELAC (Community of Latin American and Caribbean States), and member of the group of Foreign Ministers (of the Union of South American Nations), has announced a meeting of Foreign Ministers to address the situation of Venezuela. (Latin American Herald Tribune,; BBC,; Veneconomy,; El Universal,;; and more in Spanish: Diario 2001,; El Universal,


Six out of 10 Venezuelans have to line up to purchase food staples, regardless of their social status, according to the National Users’ and Consumers’ Alliance (ANAUCO). The organization reports that in addition to long lines, the numbers of products that can be sold are sometimes limited to one unit in grocery stores, drugstores and other businesses. (Veneconomy,


60% blame Maduro for the crisis

The DELPHOS polling firm says 60% of all Venezuelans do not believe the story that "economic warfare" is behind shortages and the high cost of living, and blame President Maduro for the situation. The firm's director Felix Seijas says "even radical chavistas say it is Maduro's fault because Chavez would have solved it". Seijas says Maduro's popularity is around 20%. More in Spanish: (El Nacional;


US intelligence chief expects massive protests in Venezuela this year

General Vincent Stewart, head of the Department of Defense intelligence agency has told the US Congress that "the Maduro regime will face massive protests in the months ahead of parliamentary elections this year." More in Spanish: (El Nacional;


Parliamentary election not scheduled yet

Sandra Oblitas, Vice-President of the National Electoral Council (CNE) reports the Elections Board would set the date of the upcoming parliamentary election. The Board will announce the date once a schedule is defined. (El Universal,


Former San Diego’s Mayor Enzo Scaranno and its police Chief Salvatore Lucchese concluded their 10-year and fifteen-day sentence this Wednesday, most of which they spent in isolation at the Ramo Verde military prison. Both were found guilty of not doing anything to prevent demonstrations in their district in February 2014. (Veneconomy,


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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