May 05, 2016

International Trade

 

Maduro is not interested in opening the border, says Colombia’s Santos

Colombian President Juan Manuel Santos says his Venezuelan counterpart Nicolas Maduro is not interested in reopening the binational border, even when the Colombian government remains well disposed to talks on the matter “when there is a willingness” to do so. He added that “it takes two to dance, but since only one wants to dance, then we have to manage the situation as best possible”. Lieutenant José Vielma Mora, Governor of the Táchira border state in Venezuela had reported that a binational committee will meet this month to evaluate opening up the border again. More in Spanish:  (El Nacional, http://www.el-nacional.com/politica/Santos-Maduro-interesado-reabrir-frontera_0_841716115.html; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/venezuela-y-colombia-evaluar%C3%A1n-propuestas-para-reapertura-frontera; El Universal, http://www.eluniversal.com/noticias/politica/vielma-mora-anuncio-que-discutira-reapertura-frontera-con-colombia_308146; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/regiones/comision-de-venezuela-y-colombia-evaluara-reapertu.aspx)

 

 

Logistics & Transport

 

Venezuela owes Panamanian airlines around US$ 3 billion

Francisco De Sola, President of the Panama-Venezuela Integration Chamber, reports that delays in FOREX allocations to Panamanian airlines is estimated around US$ 3 billion, arrears in the case of COPA Airlines alone are US$ 900 million. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Deuda-aerolineas-panamenas-calculada-millardos_0_841115904.html)

 

 

Oil & Energy

 

Venezuela undergoes sharp decline in oil production

A report by IPD Latin America, “estimates that Venezuela’s oil output declined 188 mb/d in Q1 2016. Production averaged 2.59 mmb/d for the quarter -- down from the 2.78 mmb/d average of 2015. For the first time since Q3 2008 oil production from all districts fell, including that of the Orinoco Oil Belt (OOB), where production had been on the rise since Q1 2009.” The report indicates the drop in production is due to

• Drilling inefficiency due to hobbled Chinese rigs
• Gas compression plant mismanagement as a result of inadequate well pressurization and increased flaring
• Redistribution of nearly 1.2 bcf/d of natural gas that used to be injected to promote crude recovery
• Lack of well maintenance
• Severely restricted access to barges to support offshore operations
• Rampant theft of electricity cables that impairs electricity supply to many wells.
• Generation units falling into disrepair
• Diluent shortages caused by liquidity issues and falling production from North Monagas fields

IPD also reports restricted cash flow which have further delayed payments to contractors, who have begun to downsize operations – a point which has little to do with the Q1 2016 oil production drop, but it will certainly have a significant impact in the future. The new estimate is a whisker above the 2.53 million bpd Venezuela produced in the first quarter, according to OPEC numbers. But it marks the first time since the third quarter of 2008 that production fell in all districts, including the extra-heavy crude Orinoco Belt. (Reuters, http://www.reuters.com/article/us-venezuela-oil-output-idUSKCN0XU22R; Bloomberg, http://www.bloomberg.com/news/articles/2016-05-03/venezuela-oil-output-slumps-in-first-quarter-as-drilling-slows)

 

Venezuela's PDVSA quietly issues new debt to pay off suppliers

Venezuelan state oil firm PDVSA has issued at least US$ 310 million in debt to companies including General Electric Co as it negotiates private issuances to pay off its suppliers, thus stretching the finances of a company that bondholders already worry is on its way to default. The securities are not bonds but offer rights similar to those enjoyed by bondholders, and at least one issue offers dispute resolution via the Paris-based International Chamber of Commerce, according to one of the three sources, who cited a term sheet. This means that if PDVSA defaults, investors holding their bonds may find that there are more creditors competing for compensation than they had originally anticipated. (Reuters, http://www.reuters.com/article/us-venezuela-economy-exclusive-idUSKCN0XU1HL)

 

Oil minister proposes fund to lift petrochemical sector in Venezuela

Petroleum and Mining Minister Eulogio del Pino has proposed the creation of a fund to boost plastic exports in the country’s petrochemical sector. The fund, intended for exports of plastic, would receive seed capital from state-run petrochemical products manufacturer Petroquímica de Venezuela (PEQUIVEN), including raw materials amounting to US$ 20 million, and money from the private sector, through financial instruments. Del Pino added that such investment could generate US$ 600 million per year. (El Universal, http://www.eluniversal.com/noticias/daily-news/oil-minister-proposes-fund-lift-petrochemical-sector-venezuela_307972)

 

 

Commodities

 

SIDOR has not produced liquid steel since January, according to union leaders at the plant, who report that key spare parts have been requested abroad but there is no FOREX to pay for them, More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/sidor-continua-sin-producir-acero-liquido-desde-en.aspx#ixzz47m2NFhKK)

 

POLAR's employees ask CENCOEX to allocate FOREX for raw materials

Over 100,000 employees of Venezuela’s major food producer Empresas POLAR rallied around the National Center for Foreign Trade (CENCOEX) in Caracas this week, to deliver a document requesting the government to allocate foreign currency for raw materials such as malted barley and other inputs necessary to continue production. They stressed they would not allow the government to seize the plants that have been halted due to lack of raw materials. (El Universal, http://www.eluniversal.com/noticias/daily-news/empresas-polars-employees-ask-cencoex-foreign-currency-for-raw-materials_308171)

 

Beef and milk consumption plunges dramatically here

Carlos Odoardo Albornoz, President of the National Cattlemen’s Association (FEDENAGA), reports that beef consumption has plunged dramatically here over the past four years: Beef consumption fell from 230,000 tons in 2012 to 90,000 tons currently. “This is the least expensive beef in Latin America, and it is eight times cheaper than in the US, what is serious is that it cannot be bought”, he added. More in Spanish: (El Nacional, http://www.el-nacional.com/sociedad/ultimos-consumo-carne-disminuyo-toneladas_0_841115988.html)

 

 

Economy & Finance

 

Istúriz says indirect subsidies may be replaced by direct subsidies

Executive Vice President Aristobulo Isturiz has indicated the government “progressively replace general subsidies with a direct subsidy” through a card that is being distributed, which the opposition terms a rationing card. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/isturiz-gobierno-tiene-que-sustituir-los-subsidios-indirectos-por-directos_308208; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/ist%C3%BAriz-nuevo-modelo-econ%C3%B3mico-requiere-una-transformaci%C3%B3n-estructural-valores-socialistas; http://www.avn.info.ve/contenido/isturiz-debemos-pasar-del-subsidio-tradicional-subsidio-directo)

 

Municipal governments may shut down due to lack of funding

Speaking on behalf of Venezuela’s Mayors Association, Baruta Mayor Gerardo Blyde reported that 80% of all municipalities have not been able to meet salary or food stamp increases due to a shortage in funds, and could be forced to shut down operations. He said that not even municipalities run by pro-government mayors have received funding, adding that funding for municipalities has dropped 43.3% when inflation is factored in. Blyde delivered his report to the Finance Committee of the National Assembly, when summoned to report on the state of local governments. More in Spanish: (NOTIMINUTO: http://www.notiminuto.com/noticia/blyde-alcaldias-del-pais-caeran-en-la-quiebra/#)

 

CONINDUSTRIA calls Maduro statements “irresponsible”

Juan Pablo Olalquiaga, President of the National Industry Confederation (CONINDUSTRIA) has asked the government to stop what he called its “attacks” on private property, ignoring property rights. He said that out of 30,000 companies there should be here, the nation only has “4,000, which are operating at 45% capacity”. He termed President Maduro’s threats of taking over any plant that stops operating, “irresponsible”. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Gobierno-nacional-continuar-atacando-propiedad_0_841715955.html)

 

US companies remain here despite economic crisis

Carlos Tejera, General Manager of the Venezuelan American Chamber of Commerce and Industry, reports US companies present in Venezuela continue to operate despite current conditions because “they have established brands, plants, and above all they have their personnel”. He said companies here face the same situation as all others, such as access to FOREX, constant inspections and the consequences of such laws as the Fair Cost and Price Law, and labor legislation. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/empresas-estadounidenses-continuan-pais-pese-situacion-economica_308191)

 

Government to adjust product prices

President Nicolas Maduro has announced his government will adjust the prices of different products “below prices set by capitalists and scalpers.”   He added “I have instructed Vice-President for the Economic Area Miguel Pérez Abad, to elaborate, along with the Superintendence of Fair Prices, on the regulation of prices that a provoked inflation has imposed against the people,” Maduro highlighted.  (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-govt-adjust-product-prices_308173)

 

 

Politics and International Affairs

 

Istúriz claims timing is insufficient for a recall referéndum

Executive Vice President Aristobulo Istúriz has said the timing is wrong for the recall referéndum called by the opposition. “They are not clearly estimating the numbers, timing will be insufficient, they are convinced they cannot defeat us democratically”, he said. He called the drive to collect signatures a fraud: “The opposition is trying to fool people, many thought they were signing for the referendum, but no, we must check them one by one since whatever they do, it is not enough…They will not remove Maduro with a referendum or any of that”, he added. (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/isturiz-sobre-referendum-los-tiempos-no-les-dan-ni.aspx#ixzz47m6B4cgC)

 

Lucena says National Elections Board will “carefully” verify recall petition signatures

National Elections Board President Tibisay Lucena has confirmed receipt of 80 boxes bearing the signed forms required to launch a recall procedure against President Nicolas Maduro, and says they will be verified “carefully”. She said results will be announced early next week. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/lucena-revision-y-verificacion-de-firmas-se-hara-c.aspx#ixzz47m5i541F; Ciudad Ccs., http://ciudadccs.info/cne-inicia-proceso-para-contabilizar-firmas-recolectadas-por-la-oposicion/)

 

…also cancels meeting with opposition leader, and threatens legal action

Lucena refused to attend a scheduled meeting with the Secretary General of the Democratic Unity (MUD) opposition coalition, Jesús Torrealba, who has launched the recall movement; and says she is considering criminal or civil legal injunctions against opposition legislators and leaders who “tried to turn a democratic process into an epic against the National Elections Council. We do not operate through blackmail from anyone, we receive pressure from no one, the Electoral body obeys only the Constitution and the law”, she said. Torrealba replied that “the meeting did not take place because Ms. Tibisay Lucena does not yet have permission from Miraflores (Presidential Palace) to meet with the head of the MUD”. The meeting was programmed to review the recall process, which has not yet begun because it is still at the stage of verifying petition signatures. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/critican-que-lucena-reuniera-con-integrantes-mud_308214; Ultimas Noticias: http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/lucena-ejercera-acciones-ante-nuevos-ataques-al-cn.aspx; Noticias24: http://www.noticias24.com/venezuela/noticia/316062/tibisay-lucena-ofrece-declaraciones-sobre-el-referendo-revocatorio/

 

Democratic Unity charges that Maduro decree violates the Constitution

Venezuela’s Democratic Unity (MUD) opposition coalition has charged that President Nicolas Maduro violated Article 246 of the nation’s Constitution by issuing a decree which “restricts and postpones” the National Assembly’s right to censure and remove Cabinet members by a majority vote.  MUD Secretary General Jesús Torrealba said the legislature censured Nutrition Minister Rodolfo Marco for defying a summons to testify. “This means this man is removed from office, and then Mr. Maduro, openly defying not only the National Assembly, but also the Constitution, refuses to dismiss him”. National Assembly President Henry Ramos Allup charged that Maduro and the Supreme Court flagrantly violate the Constitution. “Maduro says he can change the Constitution by decree”, he said. Maduro claims his decree is based on the so-called Economic Emergency Decree - which was turned down by the National Assembly and validated by the pro-regime Supreme Court - in order to “guarantee continuity in carrying out economic emergency measures” and has said “no one can touch General Marco”. A group of pro-government legislators has asked the Supreme Court to nullify the last three sessions of the National Assembly. More in Spanish: (Infolatam: http://www.infolatam.com/2016/05/04/oposicion-venezolana-asegura-que-maduro-viola-la-constitucion/)

 

DATANÁLISIS reports Maduro’s approval ratings dropped down to 26.8% in March

According to the poll taken during the first half of March, 71% of those polled disapprove Maduro’s administration, and nine out of ten believe the nation’s condition is “negative”. This is his worst rating in five months.  More in Spanish: (Infolatam: http://www.infolatam.com/2016/05/05/aprobacion-de-presidente-venezolano-maduro-cae-a-268-pct-en-marzo/

 

OAS holding special meeting at Venezuela’s request

The Organization of American States (OAS) will hold a special meeting of its Standing Council today at the request of Venezuela. This country’s Foreign Minister, Delcy Rodríguez, will attend. The request came one week after OAS Secretary General Luis Almagro met with a group of Venezuelan opposition legislators who requested that the organization observe a recall referéndum against President Nicolas Maduro and assist an institutional talks here in the light of the current serious crisis in this country. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/oea-convoca-una-reunion-extraordinaria-peticion-venezuela_308120)

 

US denies visas to Venezuelan government officials

Foreign Minister Delcy Rodríguez has denounced a decision made by the US Embassy denying visas to a number of local diplomats who must meet international commitments. She termed the move “serious” and said it violates the public international law and disregards the Vienna Convention agreements on diplomatic and consular relations.

The official explained visas were denied to people comprising a delegation that would attend an event of the Organization of American States (OAS). She added senior government officials were also part of the group. (El Universal, http://www.eluniversal.com/noticias/daily-news/denies-visas-venezuelan-diplomats-govt-officials_308072)

 

Fifty-one violent deaths recorded daily in Q1

Violent deaths in Venezuela averaged 51 per day during the first quarter this year, for a total of 4,696 murders, according to the country’s Prosecutor General Luisa Ortega Díaz. She further says that there are “an exaggerated number of firearms” in the streets, which directly contribute to violence. (El Universal, http://www.eluniversal.com/noticias/daily-news/fifty-one-daily-violent-deaths-recorded-venezuela_308094)

 

 

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.