Logistics
& Transport
American Airlines writes off US $592 million trapped
in Venezuela
American
Airlines Group Inc on Tuesday said it has written off more than half a billion
dollars in revenue stuck in Venezuela because of currency controls. American,
the world's largest airline, said in a regulatory filing it will recognize a
$592 million special charge in the just-ended fourth quarter "due to continued lack of repatriations
and deterioration of economic conditions in Venezuela." The country's
socialist government had compelled carriers to sell tickets in bolivars but
made reconverting the sales into U.S. dollars difficult. Globally, airlines
have around US$ 3.7 billion trapped in Venezuela as a result of its 12-year-old
currency control system, the International Air Transport Association said in
June. American also said on Tuesday it continues to expect a pre-tax margin between
12% and 14% for the fourth quarter, excluding special items. It continues to
expect that passenger unit revenue fell between 5% and 7% in the quarter from a
year earlier. (Reuters,
http://www.reuters.com/article/us-american-airline-venezuela-idUSKCN0UQ1OI20160112; El Universal, http://www.eluniversal.com/economia/160112/american-airlines-writes-off-usd-592-million-trapped-in-venezuela)
Oil & Energy
PDVSA still mulls debt refinance proposal
PDVSA
is still mulling a potential bond refinancing, its president said on Tuesday,
referring to a proposal floated by the state oil company to seek an extension
on payments for bonds maturing this year and next. "We're evaluating it," PDVSA president and Oil Minister Eulogio
del Pino told Reuters as he and other executives carried a huge Venezuelan flag
during an oil workers march in downtown Caracas. "We're evaluating a whole series of economic measures that the president
will announce soon," he added, without giving details. Del Pino told
local media in November that PDVSA was mulling a proposal to extend the payment
for bonds that mature in 2016 and 2017 to 2018 and 2019, when the company has a
lighter payment load. He said this would give better value for investors too
because it would help PDVSA's growth and performance. (Reuters, http://www.reuters.com/article/us-venezuela-pdvsa-idUSKCN0UQ2C720160112; El Universal, http://www.eluniversal.com/economia/160113/pdvsa-assesses-means-to-refinance-debt)
Blackout halts Paraguana refineries
Operations
at Venezuela's massive 955,000-barrel-per-day Paraguana refinery complex were
paralyzed by an electrical blackout on Wednesday morning, according to two
workers and an anti-government union leader. Employees at the 645,000-bpd Amuay
refinery and adjacent 310,000-bpd Cardon refinery were evacuated as a
precaution and children at schools near the complex were sent home, one worker
said. Firemen were at the site, another worker added. Images on social media
appeared to show thick columns of black smoke emanating from the refineries,
which are run by state oil company PDVSA. It was not immediately clear what
caused the problems reported by the workers. (Reuters, http://www.reuters.com/article/refinery-operations-pdvsa-idUSL2N14X13O20160113)
Economy & Finance
Oil price nears US$ 20, which is PDVSA’s production
cost, banks fear worse recession here
President Maduro says Venezuela’s oil price average is near US$ 24 per
barrel. He revealed the figure as he signed a collective bargaining contract
with industry workers granting them a 143% raise. DEUTSCHE BANK reports that
price is “perilously near PDVSA’s
production cost of US$ 20 per barrel”.
The bank adds that for each dollar the price goes down, the nation
receives US$ 800 million less for its exports. “As we go from an initial scenario of US$ 48 to US$ 30 per barrel this
year, the FOREX deficit can rise from US$ 17.5 billion to US$ 34.2 billion…this
will significantly increase the probability, even before the year ends, of a
credit event such as a default or a partial restructuring”. Japan’s NOMURA says that there is a higher
risk of social unrest in Venezuela that could “lead to a possible military intervention if the dead end continues”.
It warns that an institutional crisis can endanger “the messy transition”, and adds that “political paralysis will worsen recession as the opposition is forced
to take back political control”.
BANK OF AMERICA says a number of elements lead to great uncertainty as
to whether the Maduro regime will honor foreign debt commitments. It says debt
was paid in 2015 despite parliamentary elections which it lost, and says “it now makes political sense for authorities
to reconsider their decision since a recall referendum may be called in 2016”,
and adds that “the closer that voting
gets it becomes more probable that authorities might try to use resources used
to pay off debt to cover other expenses that can improve their election
prospects”. As to Maduro’s proposed economic emergency decree, BOFA
continues to say “it is unlikely the
opposition controlled National Assembly will approve the decree. But in any
case that decision is only symbolically relevant and not as important as the
FOREX rate, price controls and debt service, which are controlled by the
Executive.” More in Spanish: (El Nacional: http://www.el-nacional.com/economia/Precio-acerca-produccion-barril-Pdvsa_0_774522722.html)
National
Economic Council says “Venezuela is in a
recession”
The National Economic Council has issued a statement
asking the government to improve the allocation of FOREX for imports as part of
the steps it must take to propel the economy. “Venezuela is in a macroeconomic recession with high inflation and
product supply problems”, it says. The statement says this situation is
caused by an economic policy that limits supply of goods and services and
stimulates domestic demand. More in Spanish: (El
Nacional, http://www.el-nacional.com/economia/Consejo-Nacional-Economia-Venezuela-encuentra_0_773922837.html)
Main
business federation says eliminating controls will improve supply in 8 months
Venezuela’s principal business federation,
FEDECAMARAS, says that if the government frees up controls over the economy
there will be a “relief” in supply
over the coming months. FEDECAMARAS President Francisco
Martínez said that the truth is that “we
are in an emergency,,.. the nation’s economy cannot wait a second more without
giving it due attention. We hope the economic emergency decree announced by
President Nicolas Maduro includes adjustments that are so necessary for the
country and go to the root of the problem”. He added: “There is no domestic production because we
have excessive controls…if those ties are eliminated we will start to see
relief in store shelves in 8 to 12 months” More in Spanish:
(El
Universal, http://www.eluniversal.com/economia/160113/eliminar-controles-aliviara-los-anaqueles-en-8-meses;
Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/fedecamaras-medidas-economicas-deberian-ser-conver.aspx;
El Nacional, http://www.el-nacional.com/economia/Fedecamaras-realidad-pais-emergencia_0_773922608.html)
National
Assembly will investigate China-Venezuela and PETROCARIBE agreements
Elias Mata, Vice President of the Energy and Oil Committee
of the National Assembly says there are signed agreements the people do not
know about, and companies that are managed with little or no transparency. “We will necessarily have to set
up a joint committee with the Finance Committee on the matter of the Central
Bank, Comptroller’s office and energy and oil…in this context we will be
requesting ample information on the terms of the agreements with China and the
China Fund. We will do likewise with agreements signed within the framework of
PETROCARIBE. All we know is that buybacks have been carried out and we have
lost a lot of money.” In the case of
the China Fund, Mata underlined that “it
is US$ 60 billion and no one knows what those resources were used for, we must
know what they have been invested in”. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/energia/se-revisaran-los-convenios-china-venezuela-y-petro.aspx#ixzz3xDJSxKgl)
Venezuela
paid US$70,3 million on bond
Venezuela
has paid out US $70,3 million in interest on the Venezuela 2034 sovereign debt
bond. The next important debt payment the nation must make is scheduled
for February when it will have to pay out US$ 1.5 billion upon maturity of the
Sovereign 2016 bond. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politica/venezuela-pago--70-3-millones-por-bono-de-deuda.aspx#ixzz3xDIxOdgs; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-pago-70-3-millones-por-bono-de-deuda.aspx)
Politics and International Affairs
OAS Secretary General condemns Maduro's "erosion of democracy" in Venezuela
The
Secretary General of the Organization of American States (OAS), Luis Almagro,
called Tuesday's ruling of the Supreme Court of Venezuela against three
opposition deputies a "direct blow
to the will" of the voters. "The
attempts to harass the opposition, rape the separation of powers and interfere
with the powers of the state constitute an erosion of democracy" in
Venezuela, Almagro said in an extensive open letter to President Nicolas
Maduro. "I am sure you will keep
your word and respect the electorate's will." Almagro argues that the decision of the
Electoral Chamber of the Supreme Court to find the National Assembly in
contempt and disregard any of the parliament's actions sets the country back to
the nineteenth century. "The
InterAmerican Democratic Charter forces me to act when institutional political
process is altered," he wrote. He added that the Supreme Court
intended to undermine the will of the voters when the Electoral Chamber tries
to ignore the already accomplished legal effects of the proclamation of the
winners of the election. (Latin American Herald Tribune: http://www.laht.com/article.asp?ArticleId=2403358&CategoryId=10717)
Challenged opposition legislators move to unblock
congressional deadlock
Three
Venezuelan opposition lawmakers voluntarily gave up their seats on Wednesday to
try to defuse an acrimonious power dispute between President Nicolas Maduro's
government and the newly opposition-led National Assembly. Venezuela's Supreme
Court had barred the three - plus a government legislator - from office pending
a probe into alleged vote cheating in their jungle state Amazonas. But the
opposition, which won control of the legislature in December's elections for
the first time in 17 years of socialist rule, defiantly swore the three in
anyway. However, the opposition majority has approved a letter from the three
asking to leave the legislature pending resolution of the election dispute.
National Assembly President Henry Ramos Allup said: “They have asked to be disincorporated in order to defend themselves
legally and stop this Supreme Tribunal maneuver from making National Assembly
activity futile”. Legislator Hector Rodriguez, who heads the pro-government
parliament group, said "The
Constitution and the motherland's group have triumphed". He added that
the pro-government parliament group wanted to produce new evidence of vote
buying in Amazonas state involving opposition Governor Liborio Guarulla.
(Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN0UR1UF20160113;
Bloomberg, http://www.bloomberg.com/news/articles/2016-01-13/venezuelan-congress-backs-down-in-conflict-with-supreme-court;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2403416&CategoryId=10717;
El Universal, http://www.eluniversal.com/nacional-y-politica/160113/deputy-rodriguez-the-constitution-and-pro-govt-deputies-have-won);
and more in Spanish: (. (Ultimas
Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/impugnados-piden-ser-desincorporados.aspx#ixzz3x7U91Wpw)
Congress Speaker: Venezuela's crisis cannot be
overcome under this government
From
the Federal Legislative Palace, the seat of the Venezuelan National Assembly,
Congress Speaker Henry Ramos Allup has insisted that opposition deputies are
committed to meet the main goals they have outlined in Parliament, namely,
"promoting an amnesty law,
recovering the Executive Power and proposing a democratic formula to terminate
this government." "Presently
in Venezuela, looking at the future is looking into the darkness. If mistakes
are not corrected, a catastrophe will ensue. We believe the crisis the country
is going through cannot be overcome under this government. There are many
constitutional ways to oust (President Nicolás) Maduro," said Ramos
Allup in an interview. Ramos Allup remarked "the answer to a democratic proposal cannot be snatching." He
recalled that when former President Carlos Andrés Pérez was impeached and
ousted, “public powers worked; he was
removed and there was no bloodshed in the country." (El Universal, http://www.eluniversal.com/nacional-y-politica/160113/congress-speaker-venezuelas-crisis-cannot-be-overcome-under-this-govt)
Nicolás
Maduro will deliver his 2015 State of the Union at the
National Assembly on Friday, as established by Article 237 of the National
Constitution. The event is scheduled for 10 A.M. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=46610&idc=1)
Opposition presents property bill for beneficiaries of
housing programs
Julio
Borges, leader of the opposition coalition within the National Assembly, has
presented bill granting the title deed to the beneficiaries of the government’s
housing programs. "Not only do those
families not own those houses, but they are victims of political abuse,"
he said. He termed "false" the number of dwellings the government
said it has completed since the welfare program started to date.
"Venezuela needs to build three million dwellings to fill the gap." (El Universal, http://www.eluniversal.com/nacional-y-politica/160113/opposition-presents-property-bill-for-beneficiaries-of-housing-mission)
Venezuela's first lady says her nephews were kidnapped
by U.S.
First
lady Cilia Flores on Tuesday said two of her nephews who have been indicted on
drug trafficking charges were kidnapped by U.S. authorities, her first comments
on the case since their arrests sparked a scandal last year.
Franqui
Flores de Freitas, 30, and Efrain Campo Flores, 29, were arrested in Haiti in
November in an operation involving the Drug Enforcement Administration (DEA).
The two were later indicted in New York on charges of conspiring to traffic
cocaine, an embarrassment to President Nicolas Maduro. "We have evidence that the DEA was here on
Venezuelan territory violating our sovereignty and committing crimes on our
territory," said Flores, who is also a congresswoman, when asked about
the issue by reporters at the legislature. (Reuters, http://www.reuters.com/article/us-venezuela-drugs-idUSKCN0UR04P20160113; El Universal, http://www.eluniversal.com/nacional-y-politica/160113/first-lady-cilia-flores-accuses-dea-of-kidnapping-her-nephews)
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.
