International Trade
Colombia hopes for reopening of the border
Colombian Foreign Minister María Ángela Holguín has said
that Colombia hopes for the prompt reopening of access on the
Venezuelan-Colombian border for the purpose of integration and in light of the
relation existing between the people living in both countries. "From the very beginning we said it was a
unilateral decision adopted by Venezuela; we have remarked that we do not
believe that closing the border would actually bring any benefits..."
to fight smuggling Holguín outlined. She noted that restricted border access
would be discussed with Venezuelan Foreign Minister Rafael Ramírez during the
69th session of the UN General Assembly in New York. (El
Universal, http://www.eluniversal.com/nacional-y-politica/140922/colombia-hopes-for-soon-reopening-of-access-on-the-border)
Government to set up special economic area for Chinese
industries
President Nicolás Maduro has signed a US$ 2 billion
agreement with China for building housing in Venezuela, and says his government
will create a special economic area for setting up Chinese industries that
manufacture machinery and construction material. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/gobierno-creara-zona-economica-especial-para-fabri.aspx#ixzz3E2VwVzQs; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-creara-zona-economica-especial-para-fabri.aspx; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/ejecutivo-firma-acuerdos-china-2000-millones-para-impulsar-desarrollo-habitacional)
Oil &
Energy
New crude game erodes
luster of most CITGO refineries
The fast-changing nature of crude oil flows in
the Americas means only one of three CITGO refineries in the United States will
generate keen interest among buyers as Venezuela's cash-strapped state-run
PDVSA looks to sell its U.S. unit, and it may fetch less money than hoped,
experts say. CITGO's plant near Chicago is a highly profitable cash cow because
it runs cheap heavy crude from the burgeoning fields of Canada; CITGO's two plants
on the U.S. Gulf Coast, however, are locked into long-term supply contracts
that force them to run expensive Venezuelan crudes, officials have said. "Lemont is kind of the gem in the portfolio,"
said a refining consultant who asked not to be identified. According to his
valuation, Lemont could be sold at a price four times higher than CITGO's other
facilities. (Reuters, http://www.reuters.com/article/2014/09/22/us-refineries-citgo-sale-analysis-idUSKCN0HH2FW20140922;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41166&idc=4)
Lazard costs Venezuela US$ 100,000 per month, according to the agreement -entered
into by Lazard's Matthieu Pigasse, Francois Funck-Brentano and Jesús Luongo, on
behalf of PDVSA, cited by Venezuelan blogger Alek Boyd. Should it achieve
"consummation of a transaction"
for an "aggregate consideration up
to US$ 7 billion, it will get a 0.5% "transaction fee" and this
fee would be 0.75% if "aggregate
consideration" exceeds that amount. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41152&idc=4)
Gasoline price hike under study at the National
Assembly’s Permanent Committee on Energy and Oil, said its chairman (PSUV) Fernando Soto Rojas.
(Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41154&idc=4)
Venezuela oil price falls
to new 3 year low
Venezuela's weekly oil basket fell to a 3 year
low this week. According to figures released by the Ministry of Energy and
Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela
S.A. (PDVSA) during the week ending September 19 was US$ 88.39, down US$ 1.80
from the previous week's US$ 90.19. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2352893&CategoryId=10717)
Commodities
CLOROX exits Venezuela after price freeze hobbles operations
CLOROX Co., the consumer-products company that
sells everything from bleach to salad dressing, is pulling out of Venezuela after inflation and
government-mandated price freezes made the business unprofitable. CLOROX
Venezuela will cease operations immediately and try to sell its assets, according
to a statement today. (Bloomberg, http://www.bloomberg.com/news/2014-09-22/clorox-pulls-out-of-venezuela-after-price-freeze-hurts-business.html;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41163&idc=3;
Reuters, http://www.reuters.com/article/2014/09/22/clorox-venezuela-idUSL3N0RN43L20140922)
Venezuelan Association of Corn Processing Industries requested the price of pre-corn flout be increased to
Bs.24.8/kilogram. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41162&idc=3)
Economy
& Finance
Venezuela will make October bond payments, Bank of
America Says
Bank of America Corp. said there’s
little chance Venezuela will default on US$ 4.5 billion of payments due next
month as pressure mounts on the government to adopt policies that would
preserve hard currency. The government has no incentive to stop servicing its
debt, and state-owned Petroleos de
Venezuela SA has more than enough cash on hand to cover next month’s
obligations, Bank of America Senior Andean Economist Francisco Rodriguez wrote in a research report to clients. “The idea that a country in which a
state-owned corporation exports $85 billion a year could have trouble making a
$4.5 billion amortization payment seems stretched,” Rodriguez wrote. “These facts make a default on the October
amortizations a near-zero probability event.” (Bloomberg, http://www.bloomberg.com/news/2014-09-22/venezuela-will-make-october-bond-payments-bank-of-america-says.html)
Gold Reserve awarded US$740.3 million by ICSID for
expropriation by Venezuela
Gold Reserve Inc. has announced that the three-member
Tribunal at the World Bank’s International Center for the Settlement of
Investment Disputes (“ICSID”) has awarded the Company US$ 740.3 million in
accordance with the provisions of the Canada–Venezuela Bilateral Investment
Treaty . The Award represents US$ 713 million for the fair market value of the
Brisas Project, US$ 22.3 million for interest on the Award since April 2008
based on the US Treasury Bill rate compounded annually and $5 million for
reimbursement of legal and technical costs expended by the Company. Payment of
the Award is due and payable immediately with any unpaid amounts accruing
interest at Libor plus 2% per annum. Gold Reserve has commenced steps to ensure
the recognition and collection of the award which is immediately enforceable in
any of the 150-plus member states party to the New York Convention. (Market
Watch, http://www.marketwatch.com/story/gold-reserve-awarded-7403-million-by-icsid-for-the-expropriation-of-the-brisas-project-by-venezuela-2014-09-22)
Trade council warns of "recession"
The National Council for Trade and Services (CONSECOMERCIO)
says Venezuela's economy has been shrinking due to distortions created by the
FOREX controls and price regulations, which "leads to the rapid disappearance of medium and small enterprises in all
sectors". (El Universal, http://www.eluniversal.com/economia/140922/commerce-council-warns-about-recession-in-venezuelan-economy)
Venezuela: Probably the world’s worst-managed economy
A BIG oil producer unable to pay its bills during a
protracted oil-price boom is a rare beast. Thanks to colossal economic
mismanagement, that is exactly what Venezuela, the world’s tenth-largest oil
exporter, has become. At the end of the second quarter Venezuela’s
trade-related bills exceeded the US$ 21 billion it currently holds in foreign
assets, almost all of which is in gold or is hard to turn into cash. Over US$ 7
billion in repayments on its financial debt come due in October. The government
insists it has the means and the will to pay foreign bondholders. Few observers
expect it to miss the deadline. Even if it stays current on its financial dues,
Venezuela is behind on other bills. Exports of oil and its derivatives, which
are dollar-denominated, account for 97% of Venezuela’s foreign earnings. Using
an overvalued official rate means that the country is not making as much money
as it could: the fiscal deficit reached 17.2% of GDP last year. The government
has been bridging that gap in part by printing bolívares. That has caused the
money supply almost to quadruple in two years and led to the world’s highest
inflation rate, of over 60% a year. Food prices, by the government’s reckoning,
have nearly doubled in the past year, hitting the poor, its main constituency,
hardest of all. Even worse than inflation is scarcity. The central bank stopped
publishing monthly scarcity figures earlier this year, but independent
estimates suggest that more than a third of basic goods are missing from the
shelves. Six out of every ten medicines are reportedly unavailable. The mess is
a reflection not just of import-dependence and a shortage of dollars, but also
the mismanagement of domestic industry. Some food producers have been
nationalized; price controls often leave manufacturers operating at a loss.
Some price rises have recently been authorized, but manufacturers say it is impossible
to maintain normal output with such stop-go policies. For its part, the
government blames what it calls an “economic
war” and the contraband trade. The prospects for a change of course are
gloomy. Venezuela’s streets are calmer
now than earlier this year, when clashes between opposition protesters and
government forces left more than 40 people dead. Bondholders may well keep
getting paid. But the price of the revolution’s survival seems to be the slow
death of Venezuela. (The Economist, http://www.economist.com/news/americas/21618782-probably-worlds-worst-managed-economy-oil-and-coconut-water)
Politics
Business organizations reject intimidation of
business leaders
Jorge Roig, President of FEDECÁMARAS, the
nation's largest business organization, says detention and interrogation by
Venezuela's secret police of Eduardo Garmendia, President of the National
Industrial Council (CONINDUSTRIA) and Rusvel Gutierrez, head of the Customs
Agents Chamber, is intimidation. Both business leaders were detained and
interrogated for hours with no explanation. Roig said: "We have denounced this to the International
Labor Organization (ILO)...it is clear that all businessmen in this country are
subject to constant surveillance and constant intimidation for our opinions."
(El Universal, http://www.eluniversal.com/nacional-y-politica/140922/detention-of-head-of-the-venezuelan-confederation-of-industries-reject;
and more in Spanish: (Notitarde, http://www.notitarde.com/Economia/Fedecamaras-denunciara-intimidacion-a-empresarios-2238522/2014/09/22/355767)
US newspapers lambast
Venezuela's nomination to the UN Security Council
Two of the most influential newspapers in the
United States have questioned Venezuela's nomination to a non-permanent seat at
the UN Security Council. The New York Times and The Washington Post object to
the the Venezuelan government's record on human rights. (El Universal, http://www.eluniversal.com/nacional-y-politica/140922/us-newspapers-lambast-venezuelas-aspiration-to-the-un-security-council)
Maduro at UN General
Assembly, says US "media mob"
is "racist"
President Nicolás Maduro is in New York to attend
the UN's 69th General Assembly this week; and criticized The Washington Post
and The New York Times, which he called "media mob" after they published editorials opposing his
regime's possible entry into the UN Security Council. He called the editorials
"racist". (Reuters, http://www.reuters.com/article/2014/09/22/venezuela-un-idUSL2N0RN1TB20140922;
El Universal, http://www.eluniversal.com/nacional-y-politica/140922/maduro-to-attend-69th-session-of-the-un-general-assembly;
and ,ore in Spanish: Infolatam)
Lopez trial deferred
for the 5th time, to 30 September
The trial of opposition leader Leopoldo López
has been deferred for the fifth time, to September 30th. His lawyer, Juan
Carlos Gutiérrez, says postponement was "due to the serious health situation of student Christian Holdack, who
could not be taken to the tribunal". López is being tried along with
students Ángel González, Damian Martín, Marco Coello and Holdack. More in
Spanish: (Infolatam)
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.
