April 17, 2012

Economics & Finance

Banks increase purchases of Government bonds

The Venezuelan basket of crude oil and products stands at U$D 112 per barrel year to date, but the increase in spending is so high that the Chavez regime is quickly increasing debts with local banks. The Ministry of Finance sells bonds each week to local banks and - according to official data - the government bonds portfolio held by private and state-run banks has increased by 20% in the first two months of the year, amounting to VEB 100.19 billion (U$D 23.46 billion). Debt creation will accelerate over the coming weeks as the government sells more bonds to Venezuelan banks in order to fund the agricultural sector. (El Universal, 04-16-2012; http://www.eluniversal.com/economia/120416/private-and-state-run-banks-increase-purchase-of-govt-bonds)

CADIVI has authorized 1,000 million dollars for the food industry

The Currency Board (CADIVI) has approved U$D $ 1.202 billion for food imports during the first three months of the year, an increase of 16.6% over U$D 1.030 billion approved for the same period in 2011. Among the key food items purchased abroad are: yellow corn, cake and other soybean oil residues, milk powder, soybean oil, raw, unroasted malt, hatching eggs, animal and vegetable fats and oils. More in Spanish: (RNV; 04-16-2012; http://www.rnv.gov.ve/noticias/index.php?act=ST&f=4&t=181618)

Venezuela's stock-market registers world's largest growth

Venezuela's Stock Index is well above European stock-markets and showed the world's highest growth in 2012 with a 77.79% increase in equities, according to information published in the Spanish newspaper El Pais. Venezuela doubles Vietnam, which is second in the list. So far this year the index has grown 33.44%, followed by Egypt with 30.72%. An economic surge appeared by the end of 2011, when the Gross Domestic Product (GDP) went up 4.2%. Financial institutions and insurance grew 18.8%; construction, 12.8%; communications, 6.9%; trade, 5.7%; and manufacture, 3.3%. (AVN, 04-16-2012; http://www.avn.info.ve/contenido/venezuela039s-stock-market-registers-world039s-largest-growth)

Commodities

VENALUM operating at 28,2% capacity

Shrinking operations at the CVG VENALUM aluminum plant have taken a turn for the worse, as the industry started this week operating at 28,2% of capacity. On balance, updated yesterday, is has 26 connected cells and 649 that are out of service. 114 cells were shut down during the second week in April. More in Spanish: (El Universal; http://www.eluniversal.com/economia/120417/venalum-opera-a-282-de-su-capacidad-instalada)

Grupo Zuliano to buy Koch stake in Venezuela propylene plant

Grupo Zuliano CA will buy a 35% stake in a Venezuelan propylene plant from Koch Industries Inc., says Armando Sandoval, general manager of the Maracaibo-based company. The transaction, valued at about U$D35 million, will be completed by April 30. Grupo Zuliano, a Maracaibo-based holding company whose subsidiaries produce chemicals and plastics, previously had a 15% stake in Propileno de Falcon CA, known as PROFALCA, and will now hold 50%. A unit of state-run chemicals company PEQUIVEN SA holds the remaining amount. The acquisition was approved in a shareholders meeting yesterday, Sandoval said. (Bloomberg, 04-13-2012; http://www.bloomberg.com/news/2012-04-13/grupo-zuliano-to-buy-koch-stake-in-venezuela-propylene-plant-1-.html)

Venezuela oil falls to $113.85

Venezuela's weekly oil basket fell U$D 1.16 to U$D 113.85 as oil prices slipped in international markets on concerns over moderating world growth and European debt problems. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending April 13 fell to U$D 113.85, down from the previous week's U$D 115.01. (Latin American Herald Tribune, 04-13-2012; http://www.laht.com/article.asp?ArticleId=491978&CategoryId=10717)

PETROPAR prepares U$D 264 million debt payment

Sergio Escobar, president of Paraguayan state-run oil company Petropar, says he plans to travel to Venezuela this week to settle the payment of a U$D 264 million debt with state-run oil company Petróleos de Venezuela (PDVSA).

The top official added that there is an agreement to pay the debt. (El Universal, 04-16-2012; http://www.eluniversal.com/economia/120416/petropar-tunes-up-details-of-usd-264-million-debt-payment)

Venezuela does little to develop its mining potential

Venezuela has the largest gold reserves sin Latin America, about 65% of the region's total, but is the country with least invests in them. The same situation arises with regard to proven iron ore reserves held by the Guayana Development Corporation and developed by Ferrominera del Orinoco, are estimated at 1.7 billion tons, and calculated probable and possible deposits add up to 13 billion tons, which make it the tenth nation in the world in iron ore reserves. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/mineria/venezuela-hace-poco-para-desarrollar-el-gran-poten.aspx)

International Trade

Colombia and Venezuela ratified pending addenda to bilateral trade agreement, signed by the presidents of both nations in 2011. They include preferential tariff treatment, sanitary and phitosanitary regulations, and rules of origin, among others. (Veneconomy, 04-16-2012; AVN, 04-16-2012; http://www.avn.info.ve/contenido/venezuela-colombia-sign-commercial-accord-cartagena)

Politics

Chavez skips summit citing medical reasons, heads to Cuba for cancer treatment

President Hugo Chavez skipped the Summit of the Americas for medical reasons and headed to Cuba to continue with cancer treatment that is increasingly forcing him out of the international spotlight. Foreign Minister Nicolas Maduro announced the decision from Colombia, where he was attending the summit in Chavez’s place. He told state television that Chavez decided not to attend on the advice of his doctors. (Washington Post, 04-14-2012; http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-skips-summit-citing-medical-reasons-heads-to-cuba-for-cancer-treatment/2012/04/14/gIQAthU9HT_story.html; El Universal, 04-16-2012; http://www.eluniversal.com/nacional-y-politica/120416/chavez-back-in-cuba-to-continue-his-medical-treatment)

Evo Morales fears for Chavez health

Bolivian President Evo Morales says he fears for the life of his counterpart Hugo Chávez. In an interview with Bogotá's El Tiempo daily he said: "I have a lot of fear...It hurts that a commander has health problems", and added that the Venezuelan leader is "always an optimist" More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/120417/evo-morales-expreso-su-miedo-por-salud-de-chavez)

Farmers report guerrilla presence in Zulia

Farmers and peasants in the Machiques region of Zulia are reporting the presence of guerrilla groups in farms located at the foot of the mountains. They say that for the last week over 100 men armed with weapons and sophisticated warfare equipment have been visiting properties and requesting cooperation for their movement. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Trends in drugs trafficking in Venezuela: a "concern"

Adam Szubin, Director of US Treasury's Office of Foreign Asset Control (OFAC), the agency responsible for assistance in anti-terrorist efforts, says trends in Venezuela are "a concern". He made his statement in an interview with Caracas daily "El Universal". In 2008, the agency for the first time added senior Venezuelan government officials to its OFAC's black list of drug kingpins for alleged cooperation with the Colombian Revolutionary Armed Forces (FARC). (El Universal, 04-16-2012; http://www.eluniversal.com/nacional-y-politica/120416/the-drugs-issue-indicates-to-a-concerning-trend-in-venezuela)

Chavez listed as the most garrulous president among those still in office, adding up over 1,500 hours of speeches during in his 13-year presidency, according to Spain's daily ABC newspaper. “Long speeches are typical of leaders who are not very fond of democracy and appeal to mobilize listeners with sensations instead of presenting arguments,” explained La Fábrica de Discursos director Fran Carrillo. (Veneconomy, 04-16-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30141&idc=1)

Election Board estimates 75-80% will vote in presidential elections

Socorro Hernandez, a director at the National Elections Board (CNE), estimates that between 75 and 80% of Venezuelans registered to vote will attend on October 7 for presidential elections. "High participation is expected," as it seen by registration processes. (AVN, 04-16-2012; http://www.avn.info.ve/node/108278; el Universal, http://www.eluniversal.com/nacional-y-politica/120416/one-million-venezuelans-fail-to-enroll-in-the-register-of-voters)





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.

August 12th, 2011

Economics & Finance

Venezuela gets an additional U$D 4 billion loan from China, seeks another U$D 4 billion from Russia

President, Hugo Chavez announced that Venezuela is signing a new agreement with China for U$D4 billion. The vice-president of the state-owned oil company Petróleos de Venezuela (PDVSA), Asdrúbal Chávez, and the Minister for Commerce, Edmee Betancourt, are in China to negotiate the loan. He also said he spoke with Russian Prime Minister Vladimir Putin to “push forward” a U$D 4 billion loan. His remarks came during a telephone conversation broadcast by state television. (Bloomberg, 08-11-2011; http://www.bloomberg.com/news/2011-08-11/venezuela-s-chavez-spoke-with-putin-about-4-billion-loan.html and AVN, 09-11-2011; http://www.avn.info.ve/node/72121)

Venezuelan debt trades down

Venezuelan bonds experienced a negative trend for a third consecutive day as global stock markets continued to fall on fears of a possible downgrade of France, and the problems with Greece and the Euro area. The 2022 Global rose slightly by 0.30 percentage points to your quote and closed at 86.8%, still down from Monday’s 89.25%. The recently issued Global 2031, issued by the Republic last month, was not so lucky and fell short 0.35 points to 78.9%, down from 82.5% at the beginning of this week. More in Spanish. (El Nacional; 08-11-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Exports to the US at U$D 22.62 billion, up 49% from last year

The Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM) reports that the Venezuela-US balance of trade in June 2011 amounted to USD 3.28 billion; 49% over the same term last year. It termed the improvement is "a clear expression of the effect of higher Venezuelan oil prices on the nation's revenues." (El Universal, 08-11-2011; http://www.eluniversal.com/2011/08/11/venezuela-has-exported-usd-2262-billion-to-the-us.shtml)

Trade with Colombia up 16%

Despite uncertainties caused by the absence of a bilateral trade agreement, Venezuela-Colombia trade rose, according to Luis Alberto Russián, CEO of the Colombian-Venezuelan Chamber of Commerce (CAVECOL).  He reported that trade over the first semester this year rose to U$D 1.04 billion, a 16% hike over the same term in 2010; and added that should this pace continue in the second half of the year, operations could end up over U$D 2 billion. (El Universal, 08-11-2011; http://www.eluniversal.com/2011/08/11/upturn-in-venezuela-colombia-trade-at-16.shtml)

Agriculture downturn confirmed by the Central Bank

Despite efforts to conceal the entire picture, the Central Bank 2010 economic report includes a graph which shows agricultural production trending down since 2008; last year, it barely surpassed 0%. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/crop-loss-at-the-central-bank-of-venezuela.shtml)

Central Bank report shows 5,4% drop in household income by the close of 2010

According to information from the Central Bank (BCV) household income dropped 5,4%, at the close of 2010; at a pace “more accelerated than the previous year” More in Spanish. (El Universal; 08-12-2011; http://www.eluniversal.com/2011/08/12/bcv-reporto-caida-de-54-en-remuneraciones-al-cierre-de-2010.shtml)

Report shows confiscated companies have become a ghost industrial complex

A lengthy report by Madrid’s El País daily shows companies taken over by the Chavez Government have become a “great ghost industrial complex”. Between 2007 and 2009 Venezuela has put more money into paying for expropriations and nationalizations than into oil production. According to official data investment in exploration and production at PDVSA was U$D 21.931 billion; while the amount allocated to buy huge companies such as Siderúrgica del Orinoco (Sidor) or the national telephone company (CANTV), was U$D 23.377 billion. The amount does not include 17 cases (oil, mining, cement) currently subject to international arbitration. Studies show most companies taken over “do not generate income enough to cover their own operating costs”. More in Spanish. (El País, 08-07-2011; http://www.elpais.com/articulo/economia/global/Expropiaciones/fruto/elpepueconeg/20110807elpnegeco_1/Tes)

Venezuela to resolve Koch plant nationalization, Mundo reports

Venezuela is in talks with Koch Industries Inc. over the nationalization of the FERTINITRO plant and plans to resolve the issue by year end, El Mundo reported, citing Saul Ameliach, president of state petrochemical firm PEQUIVEN.

FERTINITRO, 35% owned by Koch when President Hugo Chavez took it over last year, produces ammonia and other chemicals in Anzoátegui state, central east Venezuela. Ameliach didn’t give further details, according to the newspaper. (Bloomberg, 08-11-2011; http://www.bloomberg.com/news/2011-08-11/venezuela-to-resolve-koch-plant-nationalization-mundo-reports.html)

Commodities

PDVSA says electricity supply to upgraders is now restored

State-run oil company Petróleos de Venezuela, S.A. (PDVSA) says on its website that operations were restored at the four heavy oil upgraders in José Antonio Anzoátegui Industrial Complex in northeast Venezuela, after a power failure on Monday. The blackout started in the Yaracuy-El Tablazo 400 KV line of the National Interconnected System, which feeds the transmission substation at the heavy crude oil processing compound. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/pdvsa-announces-restoration-of-electrical-supply-to-upgraders.shtml)

OPEC reports slight increase in Venezuela’s oil production in July

OPEC member Venezuela produced 2.77 million barrels of oil per day (bpd) in June, down from 2.79 million bpd in May, the oil ministry said on Thursday. The South American nation exported 2.41 million bpd of crude and products in June, compared with 2.48 million bpd in May. During July, Venezuela produced 2.42 million bpd, an increase of 5.2% over July 2010, when production averaged 2.3 million barrels a day. Venezuela's July extraction increased by 17,000 bpd, 0.7% up from June. (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/opec-reports-increase-in-production-in-venezuela-in-july.shtml and Reuters, 08-11-2011; http://www.reuters.com/article/2011/08/11/venezuela-oil-production-idUSN1E77A0RQ20110811)

Politics

Chavez says he feels well after chemotherapy

President Hugo Chavez told Venezuelans on Thursday he was reacting well to a second round of chemotherapy in Cuba and believed he was winning his battle against cancer. In a telephone call to state television from his hospital bed in Havana, the 57-year-old said he would finish this session of treatment on Friday but gave no date for his return home. "I'm taking well to the treatment, which began Monday and should finish on Friday," he said. (Reuters, 08-11-2011; http://www.reuters.com/article/2011/08/11/venezuela-chavez-idUSN1E77A16M20110811)

According to analyst Michael Rowan there may be 5 million phantom voters on official voting rolls

Rowan writes that serious academic statistical analysis estimates that there may be five million phantom voters on the Venezuelan official voters roll, which has not been independently audited for seven years.

In a July 29 TV address, President Chávez claimed that the US government is conspiring with the united opposition to defraud the actual winner of the 2012 presidential election, which Chávez knows is going to be him, Chávez. "They will claim electoral fraud," Chávez mused, "and then say they won and that the tyrant does not deliver. They will then threaten violence. That is the scenario that they are preparing." (El Universal, 08-10-2011; http://www.eluniversal.com/2011/08/10/election-fraud.shtml)

National Assembly to investigate purchase of Colombian news channel by former director of Globovisión

Venezuela's National Assembly (AN) today agreed to investigate the former director of the news channel Globovisión Alberto Ravell to determine the origin of the "large amount" in dollars paid for the purchase of a Colombian television news channel. "We would like to know how this man has ten million dollars when we have had seven years of foreign exchange controls in Venezuela”, says the chairman of the Standing Committee on Finance, Ricardo Sanguino. Ravell replied that he is "a promoter" and not a businessman or entrepreneur. "I managed to get a group of businessmen who deal with American media to agree, I sold the project, they liked my idea and embarked on this project with me". (Google News, 08-10-2011; http://www.google.com/hostednews/epa/article/ALeqM5jyRhh0-SF6Ipp0M89xd6Hj5-psVw?docId=1585064)

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.