March 29, 2016

Logistics & Transport

 

PDVSA claims operations are normal at main oil port

State oil company PDVSA says it guarantees that operations are normal at its main oil port, adding it had provided "uninterrupted" services to an average of 56 tankers per month. Reuters had reported heavy backlogs in tanker loadings at the port of Jose, which a union leader and a legislator said were the result of technical problems with loading arms. "PDVSA guarantees normal loading and dispatch at the (port of Jose)," the company wrote on its Twitter account. The company said that 70% of the production exported from Venezuela, equivalent to around 1.5 million barrels per day, are loaded at Jose. Reuters had reported that some 70 tankers were anchored around state-run PDVSA's ports in Venezuela and the Caribbean, most of them waiting to load oil for exports and also to discharge imported crude and products, according to Thomson Reuters vessel tracking data. (Reuters, http://www.reuters.com/article/us-oil-venezuela-backlog-idUSKCN0WS00V; http://www.reuters.com/article/oil-venezuela-backlog-idUSL2N16W1C7)

 

 

Oil & Energy

 

Ex-officials at Venezuela's PDVSA pleaded guilty in bribe case: U.S.

Three former officials at Venezuela's state oil company have pleaded guilty to U.S. charges related to a scheme by two businessmen to corruptly secure energy contracts, the U.S. Justice Department announced. The former officials at Petroleos de Venezuela S.A. (PDVSA) pleaded guilty under seal in December to conspiracy to commit money laundering. Their pleas were unsealed by a federal judge in Houston on Tuesday. The ex-PDVSA officials are Jose Luis Ramos Castillo, 38; Christian Javier Maldonado Barillas, 39; and Alfonzo Eliezer Gravina Munoz, 53. The U.S. Justice Department said each has admitted to accepting bribes from two Venezuelan businessmen, Roberto Rincon and Abraham Jose Shiera Bastidas, who were charged in December with violating the Foreign Corrupt Practices Act. (Reuters, http://www.reuters.com/article/us-venezuela-usa-corruption-idUSKCN0WP1YC; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2408655&CategoryId=10717)

 

 

Commodities

 

Guayana basic industries at minimum operations due to energy crisis

According to union leaders, Guayana’s basic industries had never reached a level of activity as low as they currently operate at, due to lack of spare parts, maintenance, and the Guri dam’s inability to generate electricity due to the severe drought. Henry Arias, Secretary General of the union at the ALCASA aluminum works reports the plant is working at 15.5% capacity. More in Spanish: (El Nacional, http://www.el-nacional.com/mundo/Empresas-basicas-Guayana-trabajan-energetica_0_818918182.html)

 

Debt with TETRA PAK curbs liquid milk supply

Roger Figueroa, President of the Venezuelan Dairy Chamber (CAVILAC) reports that a US$ 70 million long overdue debt with TETRA Pak is limiting the supply of packing material. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/deuda-con-tetra-pak-frena-abastecimiento-de-leche.aspx#ixzz44HmnEx9O)

 

GENERAL MILLS exits Venezuela

GENERAL MILLS, the company behind Cheerios and Häagen-Dazs ice cream, has called time on its operations in Venezuela.  The US company said it has sold its subsidiary in the country to an unnamed third party in a move that will leave it with a US$ 35m charge. GENERAL MILLS’s exit follows that of bleach maker CLOROX, which took a charge of more than US$ 600m to end its operations there. Venezuela’s controls and the government’s frequently shifting currency policy has proved a headache for US multinationals, who have struggled to take cash out of the country. Venezuela, which is grappling with runaway inflation, a weak oil price and crumbling tax revenues, accounted for less than 1% of GENERAL MILLS’s net sales, the company said in its annual report. (Financial Times: http://www.ft.com/fastft/2016/03/23/cheerios-maker-general-mills-exits-venezuela/)

 

 

Economy & Finance

 

CREDIT SUISSE projects Venezuela’s 2016 inflation at 326.5%, GDP contraction at 6.5%

CREDIT SUISSE is currently projecting that Venezuela’s 2016 inflation rate will hit 326.5% and social conditions here will worsen over the next months. It also says the contraction in Venezuela’s GDP – projected by them at 6.5% - will be one of the worst in the world, hit by FOREX scarcity, three-digit inflation, and an environment of political and economic uncertainty. More in Spanish: (Notitarde, http://www.notitarde.com/Economia/Proyectan-inflacion-de-3265-para-Venezuela-este-ano-2016-2642351/2016/03/27/924468/; El Nacional, http://www.el-nacional.com/economia/Credit-Suisse-proyecta-inflacion-Venezuela_0_818318297.html)

 

Total Venezuelan revenues at US$ 147 million in January-February 2016

President Nicolas Maduro has reported that US$ 147 million entered this year in January and February.  He explained that before the drop in oil prices, US$ 3.5 billion used to flow in the country. He spelled out that revenues last January amounted to US$ 77 million, down to US$ 70 million in February. (El Universal: http://www.eluniversal.com/economia/160324/venezuelan-revenues-at-usd-147-million-in-january-february-2016)

 

Venezuela continues to raid its reserves to pay its debts, political transition anticipated

Venezuela has not released its gold holdings since November of last year when they were US$ 10.97 billion, but a Swiss Federal Customs Administration Report reveals that Venezuela shipped 11,982 kilograms of gold worth US$ 456 million to Switzerland in February. And a Caracas online newspaper managed to get ahold of an Air France bill of lading showing that another 12, 561 kilograms of gold bars were flown out of Venezuela just two weeks ago on March 8, meaning at least another half-billion has left the country this month. The famed market watcher Dennis Gartman writes that “there is news that Venezuela…a country that is obviously in very, very serious financial straits… has been an aggressive and consistent seller [of gold].” He continued, “Venezuela has been selling gold since mid-year last year, but the pace of its selling…as evidenced by the decline in its official reserves…has accelerated of late. The recent run-up in prices has given the Central Bank there and the lunatic government in Caracas a wind-fall that they have apparently not been willing to pass up.” While March was a light month in terms of interest on its foreign bond debt – under US$ 300 million – April’s bond payments ramp up to US$ 782 million, with just under US$ 1 billion in May. The Central Bank president has confirmed it had been carrying out gold swaps. "It's normal, all central banks do this," said Nelson Merentes, adding that the operations have time frames of three to four years with multiple banks, which he did not identify. "As part of our strategy, the (central bank's) board of directors has decided to carry out swaps." Siobhan Morden, of NOMURA Securities, says today that evidence of continued economic stress is the leading indicator of “an irreversible process toward political transition.” She notes February’s 514% year-over-year increase in inflation, and adds: “We continue to reiterate that it has to get worse before it gets better but the intensity of the crisis reaffirms our view of a political transition and an economic transition that would argue for much higher potential recovery value.” (Reuters, http://www.reuters.com/article/venezuela-gold-switzerland-idUSL2N16U1UR; BARRON’s: http://blogs.barrons.com/emergingmarketsdaily/2016/03/24/2-venezuela-experts-on-gold-sales-bond-risk-whats-next/; Latinvest: http://www.scribd.com/doc/286044491/Latinvest-Venezuela-Report-Bond-Debts-20-October-2015; Kitco News: http://www.kitco.com/news/2016-03-23/Venezuela-s-Woes-Weighing-on-Gold-Dennis-Gartman.html)

 

Switzerland to hand Venezuela oil firm bank records to U.S.

In a widening corruption probe into Venezuela's state oil company by U.S. authorities, Swiss regulators have agreed to provide U.S. prosecutors with records from at least 18 banks relating to the oil firm. The requests for information from two separate U.S. authorities were part of their investigations into alleged money laundering and corruption in connection with the conclusion of energy contracts with Petroleos de Venezuela SA (PDVSA), Switzerland's Federal Office of Justice (FOJ) said. U.S. authorities say they have traced over US$ 1 billion to a conspiracy involving a Venezuelan magnate who allegedly paid bribes to obtain contracts from PDVSA. They are separately investing representatives of Venezuelan energy company DERWICK Associates, which has done business with PDVSA, based on the FOJ's statements. (Reuters, http://www.reuters.com/article/us-pdvsa-corruption-switzerland-idUSKCN0WR0X0; Bloomberg, http://www.bloomberg.com/news/articles/2016-03-24/swiss-banks-land-in-middle-of-money-laundering-probe-again)

 

Central Bank places securities for VEB 15 billion to drain more liquidity

The Central Bank of Venezuela (BCV) has placed VEB 15 billion (US$ 1.5 billion at the official exchange rate of VEB 10 per US dollar) in special absorption operations. The term for placement of securities is 56 days at a 7% interest rate and a minimum negotiated amount of VEB 10,000 (US$ 1,000). The auction (at 100%), which was scheduled for March 22 this year for public and private sectors, aimed at freezing a part of excess liquidity of the market to help control inflationary effects. Venezuela's financial bodies have been conducting non-stop this kind of operations to control over the currency in circulation in the country. (El Universal, http://www.eluniversal.com/economia/160328/bcv-places-securities-for-veb-15-billion-to-drain-more-liquidity)

 

 

Politics and International Affairs

 

63.6 % polled say Maduro must leave office this year, 90.9% call economic situation negative.

The most recent poll by DATANALISIS reveals that 63.4% of all Venezuelans polled disapprove of President Nicolás Maduro’s administration and believe his term should end in 2016; 29.3% want him to serve his full term to 2019. 90.9% of those polled see the economic situation as negative. 52.1% of those consulted say they would vote to revoke Maduro´s mandate in a referendum while his total approval rating was 33.1%. A recall referendum must be formally requested by at least 20% of almost 19 million voters and votes for him to leave must be more than almost 7.5 million votes for him in the 2013 election. DATANALISIS projects estimate at least 7.49 million people would vote to dismiss Maduro. Henrique Capriles, who lost to Maduro in the 2013 presidential elections and is leading the drive for the President’s recall, heads the opposition in popular support. More in Spanish: (Infolatam, http://www.infolatam.com/2016/03/27/un-636-de-venezolanos-encuestados-dice-maduro-debe-dejar-el-poder-este-ano/; Notitarde, http://www.notitarde.com/Economia/909-percibe-la-situacion-economica-como-negativa/2016/03/27/923333)

 

Pope Francis calls for talks, mutual respect in Venezuela

Pope Francis urged Venezuelans to hold talks and collaborate with each other. During the delivery of his paschal message from the central balcony of Saint Peter's Basilica, Vatican, the pontiff requested that Jesus Christ's love message "be conveyed even more to the Venezuelan people, amid the hard times facing them, as well as to those who have in their hands the country's destiny, to work for the common good through dialogue and collaboration".
Francis expects that "the culture of joining, justice and mutual respect be promoted, which is the only thing that may guarantee the spiritual and material welfare of (Venezuelan) citizens." (El Universal, http://www.eluniversal.com/nacional-y-politica/160328/pope-francis-calls-for-talks-mutual-respect-in-venezuela)

 

Maduro claims Obama heads plan to dominate Latin America again

Following US President Barack Obama’s visits to Cuba and Argentina, Venezuela’s President Nicolas Maduro is claiming that Obama heads up an “imperial strategy” to once again dominate Latin America and the Caribbean by “overthrowing” governments such as that of Dilma Rousseff in Brazil or seeking to change others, like Venezuela. He claims that the “strategy” includes “combating” “honest leaders” such as Rafael Correa in Ecuador, conducting smear campaigns against Nicaragua’s Daniel Ortega and Argentina’s former president Cristina Fernández. But, he added, “we must all make great corrections within the wear and tear of governing Venezuela for 17 years.” More in Spanish: (Infolatam, http://www.infolatam.com/2016/03/25/maduro-afirma-que-obama-encabeza-plan-para-volver-a-dominar-america-latina/)

 

Top court reviews the constitutionality of Central Bank Law reform, a new clash looms with legislature

President Nicolas Maduro has sent the reform of the Law of the Central Bank of Venezuela (BCV) to the Constitutional Chamber of the Supreme Tribunal of Justice (TSJ) so that the country's top court may assess the constitutionality of the bill, passed on March 3 by the National Assembly (AN). The Congress' move came three months after Maduro enacted, via enabling law, the BCV's law reform. National Assembly authorities have ordered publication of the approved bill in light of no response from the Executive within 10 days.  (El Universal, http://www.eluniversal.com/nacional-y-politica/160328/venezuelas-top-court-assesses-constitutionality-of-bcv-law-reform; and more in Spanish: El Nacional, http://www.el-nacional.com/politica/Parlamento-promulgo-Ley-BCV-Ejecutivo_0_819518327.html)

 

Ruling party politician slain, Colombia rejects baseless charges

A supporter of Venezuela’s ruling leftist PSUV party who served as an alternate in the legislature of the western state of Tachira was gunned down in a town on the Colombian border and his associates are pointing the finger at paramilitaries based in the neighboring country. Tachira’s PSUV governor, Lieutenant Jose Vielma Mora, was quick to refer to the gunmen who killed Cesar Vera as “assassins, terrorists who hate the people” and linked the shooters to former Colombian President Alvaro Uribe. The security commissioner in Tachira, Ramon Cabeza, said Vera, 40, was the victim of a “paramilitary group.” Colombia’s Foreign Ministry has issued a statement rejecting the accusation and asked Vielma to show proof and refrain from branding inhabitants of the border area. William Villamizar, Governor of Colombia’s adjoining Norte de Santander department said the Tachira Governor should not issue charges “without prior investigations”. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2408609&CategoryId=10717; and more in Spanish: Caracol: http://caracol.com.co/emisora/2016/03/27/cucuta/1459104042_087851.html)

 

Dominican Republic antinarcotics authority slams judge for ordering release of suspects

The Dominican Republic’s National Drugs Control Agency (DNCD) has lashed out at an interim judge there for releasing five Venezuelans arrested at La Romana International Airport, with 359 kilos of cocaine. The surprising release order for the Venezuelans is the latest scandal involving an interim judge in drug trafficking and money laundering cases, where bribes are suspected. The defendants were arrested by National Investigations Dept. (DNI), Justice Ministry officials and antinarcotics (DNCD) agents, which confiscated a Cessna C404, Barquisimeto, Venezuela registry YV2708. The drug was in 349 bricks in three suitcases and two bags hidden on the plane. The DNCD said it was "outraged" by the ruling handed down by La Romana (east) interim judge Aristida Mercedes to release the suspects without bond. The La Romana Office of the Prosecutor on Monday said the five Venezuelans charged with are still in custody. Venezuela’s Prosecutor General has announced that three Bolivarian National Guard sergeants have been detained at Barquisimeto’s airport in connection with the shipment. And Miami’s El Nuevo Herald journalist Antonio María Delgado reports that diplomatic pressure by Venezuelan President Nicolás Maduro was behind the release order in the Dominican Republic. (Dominican Today: http://www.dominicantoday.com/dr/local/2016/3/28/58712/Despite-judges-ruling-Venezuelans-in-369K-cocaine-case-still-in-jail; and more in Spanish: http://www.elnuevoherald.com/noticias/mundo/america-latina/venezuela-es/article68531672.html#storylink=cpy; Acento, http://acento.com.do/2016/actualidad/8335531-periodista-afirma-que-maduro-presiono-por-libertad-de-venezolanos-acusados-de-narcotrafico-en-rd/)

 

Police capture 3 for airport murder of Egyptian visitor

Interior Minister General Gustavo Gonzalez has reported the capture of three people suspected in the shooting death of an Egyptian man at the Maiquetía International Airport. The Prosecutor General’s Office said in a communique that the three suspects would appear in court later on Thursday. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2408531&CategoryId=10717)

 

Increased violence against minors reported in Venezuela

A rise in violent acts -including frequency and intensity- against minors in Venezuela was reported by organizations in charge of protecting human rights of children and teenagers. In fact, on March 15-18, three minors were murdered: one during an alleged shootout with police officers; other was kidnapped and killed; and a third one was mistreated and molested by his stepfather. Add to this the case of a two-month old baby who was left under a bridge by his own 18-year old mother. Carlos Trapani, a representative from the Network of Children and Teenagers' Human Rights of NGO Community Centers of Learning (CECODAP), warned that "nowadays, there is much violence and cruelty against minors." In his words, this shows the risk facing childhood and adolescence in the country. (El Universal, http://www.eluniversal.com/nacional-y-politica/160326/increased-violence-against-minors-reported-in-venezuela)

 

Isturiz reveals there were almost 3 lootings daily during Easter week

Executive Vice President Aristóbulo Istúriz has revealed that there were 21 lootings, 22 kidnappings and 20 robberies at hospitals, which means there were 3 lootings and 2 robberies daily during the Easter holidays. More in Spanish: (Tal Cual Digital: http://www.talcualdigital.com/Nota/124577/aristobulo-revela-que-en-semana-santa-hubo-casi-3-saqueos-al-dia-video)

 

 

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.