March 29, 2013

Economics & Finance

BARCLAYS: Undisclosed SICAD exchange rate indicates strong devaluation

Venezuela's Planning and Finance Ministry reports that the first FOREX auction through the Ancillary Foreign Currency Administration System (SICAD) was U$D 200 million allocated to 383 corporate bidders, at an unknown exchange rate, which has led BARCLAYS Capital to suggest there has been a strong devaluation of the local currency, for the second time in 47 days. Official reports have not revealed criteria for selecting beneficiaries, nor have they disclosed whether allocations went to public and private companies alike. (El Universal, 03-28-2013; http://www.eluniversal.com/economia/130328/barclays-capital-blinding-sicad-exchange-rate-hints-strong-devaluation; http://www.eluniversal.com/economia/130327/novel-auction-awards-usd-200-million-to-383-companies; Bloomberg, http://www.bloomberg.com/news/2013-03-27/venezuela-sells-200-mln-in-auction-without-revealing-fx-rate.html; Reuters, http://www.reuters.com/article/2013/03/27/venezuela-economy-idUSL2N0CJ1JQ20130327)

Fitch Affirms Venezuela’s IDRs at ‘B+’

Fitch Ratings has affirmed Venezuela’s ratings as follows: Long-term foreign currency (FC) and local currency (LC) Issuer Default Ratings (IDRs) at ‘B+’; Short-term FC IDR at ‘B’; Country Ceiling at ‘B+’. The Rating Outlook is Negative. (Latin American Herald Tribune, 03-26-2013; http://www.laht.com/article.asp?ArticleId=726983&CategoryId=10717; Reuters, http://www.reuters.com/article/2013/03/27/fitch-affirms-venezuelas-idrs-at-b-outlo-idUSFit65300020130327)

PDVSA cuts funding to welfare programs

Based on the 2012 report compiled by state-owned oil company PDVSA, the oil giant allocated fewer funds to welfare programs commonly known as missions. The Great Housing program was the only exception. According to the annual report, resources for social, agriculture and community programs fell by 22%, from U$D 15.3 billion in 2011 to U$D 11.9 billion in 2012. Resources to community programs were cut 71%, from U$D 585 million in 2011 to U$D 170 million in 2012. (El Universal, 03-28-2013; http://www.eluniversal.com/economia/130327/venezuelan-state-oil-company-pdvsa-cuts-down-funds-to-welfare-programs)

Food manufacturers, distributors may see protests over shortages

Food manufacturers and distributors may see a wave of labor union protests in the coming days, and possible temporary closures ordered by the government, as shortages of staple foods become increasingly acute. Scarcity of basic foods has now climbed to its highest level since May 2008, according to Venezuela's central bank, which monthly calculates a scarcity index based on the availability of 17 different items in a range of shops. The Central Bolivariana Socialista de Trabajadores, CBST, which groups some 1,500 labor unions and which is politically affiliated to the government of interim President Nicolas Maduro, accuses supermarket chains of hoarding foods and speculating with prices; most economists attribute shortages to government-imposed price and exchange controls. Earlier this week members of the CBST demonstrated in various cities around the country, with the main protest target being Empresas POLAR, the country's largest privately-owned industrial conglomerate, although its operations in Caracas and Barquisimeto were not affected. The CBST plans to extend its protests to 12 of the country's 23 states. Another potential target in the foods sector is CARGILL. Although the protests are unlikely to immediately cause major disruptions to operations, they could prompt government institutions such as the tax collection agency, SENIAT, and the consumer protection agency, INDEPABIS, to carry out more spot inspections of businesses, leading to temporary closures and fines. In February INDEPABIS shut down at least five nationwide department stores chains. (LATIN-IG: http://www.latin-iq.com/)

International Trade

Uruguay has requested to join the regional SUCRE currency, a move that will bring it into greater cooperation with the leftist ALBA, despite the fact it is not a member of the alliance yet. The regional currency system, the Unitary System of Regional Compensation (SUCRE) is used by Bolivia, Cuba, Ecuador, Nicaragua and Venezuela. (Veneconomy, 03-26-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34169&idc=2)

Politics

Political expert says Maduro is weakened

"The main challenge for Henrique Capriles Radonski is to make people realize that should they act as in the last presidential election of October 7, 2012. In the event of a turnout of seven million people for the opposition, winning the election of April 14 is plausible," according to Ángel Oropeza, a political expert and professor at Central University of Venezuela (UCV). He adds that pro-government voting has been be lower whenever deceased President Hugo Chávez was not running.  "History is against Chávezism; a part of the pro-government vote is tied to Chávez's figure," he says. (El Universal, 03-28-2013; http://www.eluniversal.com/nacional-y-politica/130328/venezuelan-political-expert-maduro-is-weakened)

Election in Venezuela escalates with disqualifications on both sides

Everything counts in Venezuelan electioneering heading for the Presidential election on April 14, first to be held in the absence of deceased President Hugo Chávez, which is a face-off between acting President Nicolás Maduro and opposition leader Henrique Capriles Radonski. (El Universal, 03-28-2013; http://www.eluniversal.com/nacional-y-politica/130328/electioneering-in-venezuela-escalates-with-disqualification-from-both-)

US former official: Washington warned Chávez about assassination in 2002

In an article published on Americas Forum, Otto Reich, former Assistant Secretary of state for Western Hemisphere Affairs, stays the US alerted late Venezuelan President Hugo Chávez of an alleged plot back in 2002. Following accusations of acting President Nicolás Maduro, Reich denied Washington's involvement in the death of the Venezuelan leader, who died from cancer on March 5. "Despite the hostility that characterized the US relationship with Chávez, it is not only false to accuse the United States of killing Chávez, but the truth is that we likely prevented his assassination on more than one occasion," Reich remarked. (El Universal, 03-27-2013; http://www.eluniversal.com/nacional-y-politica/130327/us-former-official-washington-warned-chavez-about-assassination-in-200)

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 14th, 2012

Economics & Finance

Central Bank changes gold valuation method

The Central Bank has decided to change the method used to value gold reserves, and lessened the impact of internationally diminished gold prices. Gold accounts for 68% of Venezuela's total reserves, and beginning May this year its price will be measured by an six month average of prices in the London market and not - as before - on an average for the previous two months. This change should lessen the impact of dropping gold prices. More in Spanish: (El Universal, 08-14-2012; http://www.eluniversal.com/economia/120814/banco-central-modifica-metodo-para-valorar-las-reservas-en-oro)

Larger companies have begun using "sucres" for international transactions

Central Bank Vice President Eudomar Tovar announced that large companies such as MAZDA, KIA, and POLAR subsidiaries have begun using the Unified Regional Payment Compensation System (SUCRE), a currency system established by several nations that are part of the ALBA system (Cuba, Ecuador, Nicaragua, Bolivia and Venezuela). Tovar says the SUCRE provides an interesting niche for spare parts and assembled products. More in Spanish: (El Mundo, 08-14-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/empresas-venezolanas-privadas-comenzaron-a-transar.aspx)

Tax revision proposed due to Venezuelan's entry into MERCOSUR

Roberta Nuñez, an attorney with KPMG, says the local private sector requires a deep revision of the tax system in order to "preserve the purchasing power of investors and individuals", and match regulations and other conditions in MERCOSUR nations. Current conditions create a number of surcharges that have become a major concern in recent years. (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/tax-revision-suggested-upon-venezuelan-entry-into-mercosur)

Central government spending slows down in July

Spending by the central government slowed down, falling by 20% in real terms in July, three months ahead of the presidential elections. Data released by the Ministry of Finance reveals that public expenditure was U$D USD 7.2 billion, which is less than last year during the same period. According to ECOANALÍTICA think tank director Asdrúbal Oliveros, this reveals that the government began spending the annual budget early. However he foresees renewed acceleration of expenses in August, due to the number of additional credits recently approved to cover the deficit budget in public agencies. (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/venezuela-central-government-spending-loses-momentum-in-july)

Food sales drop to lowest level in 3 years

According to a report by the national Food Industry Chamber, food sales dropped 4.3% in June, which is the lowest level in three years. It shows tonnage has been falling steadily since March 2011, largely due to price controls and higher production costs. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/)

Commodities

Venezuela officially confirmed holding largest oil reserves in the world

The OPEC annual report has confirmed that Venezuela has larger proven oil reserves than Saudi Arabia. Proven reserves are estimated at 297.6 billion barrels, which is 0.4% more than measured in 2010 and triple the amount certified in 2007. Saudi Arabia comes in second at 265.4 billion barrels. The difference is that Venezuela has heavier crudes which sell at a lower price than Saudi light oil. Venezuela is also seventh globally in national gas, at 5.5 billion cubic feet. More in Spanish: (Ultimas Noticias, 08-14-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-es-primera-en-reservas-petroleras.aspx)

China shows it gets 320,900 barrels per day from Venezuela, at the cheapest price

Data from the Chinese Customs Authority show Venezuela as their sixth largest supplier of oil by the close of the first semester 2012, and also shows Venezuela sells China it´s oil at the lowest price: U$D 99.67 per barrel, which is 7.14% less than the average cost for Venezuelan oil, which was U$D 107.34 per barrel during the same time frame. Saudi Arabia is China's largest provider, holding 22.6% of total imported volume, at U$D 109.72 per barrel; Angola comes in second, at U$D 115 per barrel; and Iran is third at U$D 108 per barrel. Russia takes fourth place, and received U$D 112,63 per barrel; followed by Omán, which gets U$D 117.4 per barrel. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-sube-exportaciones-a-china-a-640-000-bar.aspx)

Oil Minister Rafael Ramírez claims oil is exported at international prices. More in Spanish: (AVN, 08-14-2012; http://www.avn.info.ve/contenido/rafael-ramírez-petróleo-venezolano-se-exporta-precios-internacionales)

OPEC: Venezuelan oil production down 2.4%

The Organization of Petroleum Exporting Countries (OPEC) reports that Venezuelan oil production dropped in July.

Its data indicates Venezuelan oil output stood at 2.3 million barrels per day (bpd), that is to say 2.4% down if compared with figures recorded in July (2.4 million bpd). (El Universal, 08-13-2012; http://www.eluniversal.com/economia/120813/opec-venezuelan-oil-production-down-24)

ONGC sees start of Venezuelan project delayed by election

India’s Oil & Natural Gas Corp. (ONGC) expects the start of production at the Carabobo 1 block in Venezuela to be delayed until early next year as the country prepares for presidential elections in October. The project, previously slated to begin output in December, will probably start producing about 10,000 barrels of heavy crude a day in February or March, an executive at ONGC, as the New Delhi-based state-owned company is known, said in a conference call. (Bloomberg, 08-13-2012; http://www.bloomberg.com/news/2012-08-13/ongc-sees-start-of-venezuelan-project-delayed-by-election.html)

PDVSA says it repaired ruptured pipe carrying crude oil

Petróleos de Venezuela SA, the state oil company, said it repaired a ruptured pipe carrying crude oil from the Orinoco Belt to the company’s refineries in Puerto La Cruz, Anzoátegui state. PDVSA, as the company is known, ceased pumping oil after a 26-inch pipe fractured at around 8 a.m. local time, the company said in a statement. It didn’t say when it resumed extraction. (Bloomberg, 08-12-2012; http://www.bloomberg.com/news/2012-08-13/pdvsa-says-it-repaired-ruptured-pipe-carrying-crude-oil.html)

Venezuela gets good sign from REPSOL on YPF dispute, Chavez says

Venezuela has received a “positive” letter from REPSOL SA about its efforts to resolve a dispute with Argentina over the nationalization of its YPF unit, President Hugo Chavez says. Venezuela is “friends” with REPSOL and maintains good relations with the company, Chavez said on state television, adding that he received a letter from REPSOL Chairman Antonio Brufau that contained a “good signal.” (Bloomberg, 08-10-2012; http://www.bloomberg.com/news/2012-08-10/venezuela-gets-good-sign-from-repsol-on-ypf-dispute-chavez-says.html)

Labor leader reports SIDOR thermoelectric plants paralyzed, no gas available for steel production

Both thermoelectric plants ordered by the government for installment at the SIDOR steel plant are paralyzed: one due to fuel supplies logistics and the other because its construction was never finished. The report comes by SIDOR labor leader Junis Hernández, who explains poor road conditions between the Anaco filling facility in Anzoátegui and the SIDOR plant at Matanzas, in Bolivar state, make it difficult to bring some 30 daily tank trunks to the plant. He also said PDVSA does not send gas supplies with regularity. More in Spanish: (El Nacional, 08-14-2012; http://www.el-nacional.com/)

International Trade

Puerto Cabello holds 26 vessels at bay, some for up to 44 days

The port of Puerto Cabello still reports 26 ships at bay, and vessels such as grain carrier “Nai Chang Hai”, have been waiting to dock with yellow corn for 44 days.  Yesterday there were 12 grain ships undertaking offloading operations. More in Spanish: (El Carabobeño, 08-14-2012; http://www.el-carabobeno.com/impreso/articulo/27783/baha-portea-cierra-el-lunes-con-26-buques-en-fondeo)

Logistics & Transport

Trade between Venezuela and Colombia increased by 32% over last year according to the Venezuela-Colombia Integration Chamber President Luis Alberto Russian, who added volume could be higher if the pending trade agreement is signed. More in Spanish: (El Mundo, 08-14-2012, http://www.elmundo.com.ve/noticias/economia/internacional/intercambio-comercial-entre-venezuela-y-colombia-c.aspx)

Imports from Brazil increased 30%

During the first seven months of the year, the value of Brazilian exports to Venezuela rose 30.2% over the same period of 2011 and exceeded U$D 2.758 billion. By the end of the year, purchases from Brazil should total trade last year, when averaged U$D 4.591 billion. More in Spanish: (El Mundo, 08-13-2012, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/valor-de-importaciones-brasilenas-aumento-30-.aspx)

Politics

Government party says it will defend Chavez victory using all means

Less than two months away from presidential elections, the United Socialist Party of Venezuela is saying that it will defend a victory by President Chavez, "wherever and however". The statement was made by party Vice President Diosdado Cabello, who said votes must be sought in order to avoid any intention on the part of the opposition of not conceding results on October 7th. More in Spanish: (El Universal, 08-14-2012; http://www.eluniversal.com/nacional-y-politica/120814/psuv-el-triunfo-de-chavez-lo-defenderemos-como-sea)

May 25th, 2012

Economics & Finance

Consumption soars 5.7% and US dollar shortage intensifies

After a huge dose of public spending, including wage hikes and increased subsidies, the Government has once again elevated private consumption, which has soared to 5.7% in the first quarter 2012. The problem is that higher demand forces authorities to increase and speed up the authorizations of US dollars within an economy that is highly dependent on imported products and finished goods. In order to meet demand, imports have climbed 48.5%. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/consumption-soars-57-and-shortage-of-us-dollars-intensifies)

GDP numbers point to deteriorated manufacturing sector

Figures for the first quarter of 2012 released by the Central Bank (BCV) confirm that the manufacturing sector is "quite deteriorated," according to Carlos Larrazábal, head of the National Industry Federation (CONINDUSTRIA). He said statistics for over 300 industries are very discouraging as they show growth of only 0.7% during the first quarter this year, as opposed a reported overall growth by 5.6% year to date. Food and agribusiness dropped by 6.9% and has been falling for four consecutive quarters. Overall Central Bank information shows that agriculture, industry, mining and oil have dropped 10 percentage points within national GDP in the 1998-2011 periods, during the Chavez Administration. They steadily fell from 42.4% to 32.1% over all these years, with the exception of 2003. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/gdp-numbers-point-to-deteriorated-manufacturing-sector; and more in Spanish: El Nacional; http://www.el-nacional.com/; Tal Cual; http://www.talcualdigital.com/index.html; El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/afirman-que-para-recuperar-la-industria-debe-cesar-el-cerco)

Private construction has dropped 10.6% over nine consecutive quarters, said Venezuelan Construction Chamber chief Gilbert Dao. The Central Bank (BCV) itself admits the few supplies obtained are being absorbed by official housing programs. (Veneconomy, 05-21-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30589&idc=3)

Private sector holds over U$D 143 billion abroad, despite exchange controls

Central Bank figures on balance of payments reveal that between the first quarter 2003 and the first quarter this year private sector deposits abroad have grown 248% from U$D 41.268 billion to U$D 143.638 billion, despite exchange controls. One of the means used to send capital abroad is the instrument devised by the Government itself to obtain financing and reduce liquidity domestically: these are the dollar denominated bonds issued by PDVSA and the Finance Ministry, which companies and individuals purchase and sell abroad in order to obtain hard currency. More in Spanish: (El Universal, 05-25-2012; http://www.eluniversal.com/economia/120525/sector-privado-tiene-depositos-por-143-millardos-en-el-exterior)

Draft antitrust bill sets more ways to expropriate

The National Assembly is speeding up an Antitrust Law which aims to establish that goods used to produce essential products could be declared of public utility, and it provides for additional mechanisms for expropriation. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/venezuelan-antitrust-bill-establishes-more-ways-to-expropriate)

Reserves lower due to drop in gold prices

As gold prices continue to drop so do reserves held by Venezuela's Central Bank, which holds 11,76 million troy ounces as 73% of its international reserves. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/oro-cae-por-debajo-de-la-ultima-valoracion-hecha-a-las-reservas)

Commodities

PDVSA loses U$D 21 billion in  China financing schemes

The recent amendment to the financing agreement between China and Venezuela, approved Tuesday by the National Assembly, calls for PDVSA to increase crude oil shipments to China to 530,000 BPD (barrels per day) at discounted prices - which means the national oil company will receive U$D 21 billion less per year for exports. Venezuela has two agreements with China, both paid for in oil. One is the "Great Volume Fund", a U$D 20 billion loan by China, of which 10 billion yuan are exclusively earmarked for imports from China. This credit is repaid by exporting 300,000 BPD. The new amendment raised the figure to 530,000 BPD. More in Spanish: (El Nacional, 05-25-2012; http://www.el-nacional.com/)

Crude oil prices under U$D 90 for the first time in six months due to an increase in US reserves to their highest level since 1990, due mainly to fears on Greece's possible exit from the euro and the situation with Iran. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/precio-del-crudo-cae-por-debajo-de-90-por-primera-vez-en-6-meses)

PDVSA royalty contribution down 76% in January, according to the Central Bank monthly report. Analysts claim that one of the elements that bears upon this calculation is the oil barrel reference price used in royalty transfers. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/76-bajo-el-aporte-de-pdvsa-por-regalias-en-enero)

International Trade

Loopholes detected  in Venezuela-Colombia trade agreement

Asdrubal Oliveros, of the ECOANALITICA research firm says the recent trade agreement by Venezuela and Colombia is "significant progress" in bilateral relations, but, that it continues to have "loopholes" in matters concerning transportation, investment protection and dispute resolution that were previously covered by the Andean Community. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/estiman-que-hay-lagunas-en-el-acuerdo-comercial-con-colombia)

585 trade operations have been made using the Sucre (Single System of Regional Compensation, in Spanish) for U$D 208 million in the first four months of this year, according to Central Bank (BCV) first Vice President and chief of the Sucre Regional Monetary Council Eudomar Tovar today. (Veneconomy, 05-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30604&idc=2)

Logistics & Transport

Port system "collapsing" due to massive imports

Carlos Larrazábal, head of the National Industry Federation, says the situation at Venezuelan ports has become "extremely serious" since the Government took over control and launched a large scale import policy. "The problem is due to the larger volume of imports. We imported U$D 13 billion during the first quarter and are headed toward U$D 50 billion in imports, an unheard of figure for an economy this size". State agencies such as CASA and PDVAL use Puerto Cabello - the nation's main port - for permanent storage. Refrigerated containers bringing in food from South American nations have been stored at Cartagena (Colombia), Colón (Panamá) and Kingston (Jamaica). More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/empresarios-reportan-colapso-en-los-puertos-nacionales; El Nacional; http://www.el-nacional.com/)

Serious delays reported at Puerto Cabello

31 vessels were reported in the Puerto Cabello harbor this Monday, bearing bulk, containers and assorted cargo. 23 ships remained in the bay, waiting to dock, according to sources close to the Puerto Cabello Port Authority. The situation is critical as Puerto Cabello is not equipped to manage the overload and Carabobo State Legislator Neidy Rosal says it takes up to two weeks to offload cargo that should normally be processed in 24 to 72 hours, mainly due to electricity outages which encumber all procedures. More in Spanish: (El Carabobeño, 05-22-2012; http://www.el-carabobeno.com/litoral/articulo/34647/comunidad-martima-reporta-31-buques-en-la-baha-portea; http://www.el-carabobeno.com/impreso/articulo/18163/-baha-portea-alberga-25-buques--fondeados-con-varias-cargas; Notitarde; http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1647229&idcat=9849&tipo=2;)

Freightage to Venezuela 60% more expensive

Antonio Landaeta, President of FEDECAMARAS in Carabobo State says that due to the saturation at Puerto Cabello freightage to Venezuela costs 60% more than shipping to countries like Colombia or Chile. He says higher costs are due to delays in offloading cargo. 22 of the ships awaiting to discharge cargo at Puerto Cabello are grain carriers and their offloading is slow since there are only three or four docks equipped to service grain shipments that take longer to offload than containers. More in Spanish: (Tal Cual, 05-24-2012; http://www.talcualdigital.com/index.html and El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/denuncian-retrasos-en-el-puerto-de-puerto-cabello)

Multinational companies holding Venezuela inventories in Panama

According to Panamanian business sources, warehouses in the Colón Free Zone in Panama are increasingly storing more merchandise destined to Venezuela due to decisions by multinational companies to lower inventories held locally here due to the risk of expropriation. This seems to be particularly the case with pharmaceutical and personal care products. More in Spanish: (El Nacional, 05-24-2012; http://www.el-nacional.com/)

Politics

Chavez reappears, leads cabinet meeting

President Hugo Chavez reappeared on Tuesday in a live television broadcast, the first time he has been seen in public view since returning from cancer treatment in Cuba almost two weeks ago. Chavez spoke in a strong voice and did not appear tired during the broadcast, which lasted more than two hours. He made no reference to his health, of which few details are known. (Reuters, 05-22-2012; http://www.reuters.com/article/2012/05/23/venezuela-chavez-idUSL1E8GN0BO20120523; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-reappears-on-television-leading-cabinet-meeting-following-cancer-treatment/2012/05/22/gIQAdt28iU_story.html)

Colombian and Venezuelan armies militarize the border

Colombia and Venezuela have militarized both sides of the border in order to persecute members of the Colombian Revolutionary Armed Forces (FARC) who last Monday killed 12 Colombian troops. The Colombia-Venezuela Northwest border was taken over by security forces from both countries in an attempt to lay siege to the members of the FARC Front 59 that is based in Venezuela, according to Colombian authorities. (El Universal, 05-23-2012; http://www.eluniversal.com/nacional-y-politica/120523/colombian-and-venezuelan-armies-militarize-the-border)

Venezuela sent Syria 35,000 tons of diesel oil

A Venezuelan ship loaded with 35,000 tons of diesel oil has arrived to port in Syria, according to that nation's Oil Minister Sufian Alao. Syrians have been facing fuel scarcities for months due to international sanctions that have led Western oil companies to interrupt supplies to this country. More in Spanish: (El Mundo, 05-24-2012, http://www.elmundo.com.ve/noticias/economia/energia/barco-venezolano-con-35-000-toneladas-de-diesel-ll.aspx)

....and rejects US State Department human rights report

A Department of State reports points out Cuba and Venezuela as countries where respect for human rights concerns the United States. The "Human Rights Practices 2011" report says the Chavez regime has continued using the judiciary to "intimidate and persecute political, union and business leaders, and civil society". The Chavez government called the report an "unacceptable interference into internal affairs".  More in Spanish: (AVN, 05-25-2012; http://www.avn.info.ve/contenido/venezuela-rechaza-informe-ddhh-presentando-departamento-estado-estados-unidos  and El Universal; http://www.eluniversal.com/internacional/120525/critican-situacion-de-derechos-humanos-en-cuba-y-venezuela)

Romney calls Chavez, Castro a "great danger"

Republican candidate Mitt Romney terms the Castro regime in Cuba and Venezuelan President Hugo Chavez a "great danger" to the United States and the world and says the United States should pay more attention to Latin America. According to the GOP presidential candidate Chavez and Castro "are a great danger to the United States and to people around the world... we must promote our values, free enterprise, democracy". More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/internacional/120524/romney-tilda-a-chavez-y-a-castro-de-peligrosos-para-estados-unidos)

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 16th, 2011

Economics & Finance

Analysts: Pending price-control law could backfire, boosting inflation in Venezuela

Pending legislation aimed at curbing Venezuela’s soaring inflation could backfire by boosting consumer prices, spurring corruption, stemming investment and causing more severe shortages of basic goods, analysts warned on Saturday. Government officials and lawmakers loyal to President Hugo Chavez claim the Law for Fair Costs and Prices would help reduce Latin America’s highest rate of inflation by forcing businesses to set retail prices at rates established by government officials. Among the factors that officials would consider are production costs such as raw materials and labor. (The Washington Post, 08-13-2011; http://www.washingtonpost.com/politics/analysts-pending-price-control-law-could-backfire-boosting-inflation-in-venezuela/2011/08/13/gIQA3BCaDJ_story.html)

Chávez promotes the SUCRE as a tool to shield the region from financial crisis

Though a phone call to a partisan event by his supporters, President Chávez said that the Unified Regional Compensation System (SUCRE) has potential as a tool to shield the region from the financial crisis caused by global economic meltdown in the U.S. and Europe. He added that launching a single currency would allow them to ignore the dictates of US currency. More in Spanish: (AVN, 08-15-2011; http://www.avn.info.ve/node/72483)

PDVSA relies on nine special funds for parallel expenditures

Live the Venezuelan Government, the state-run oil holding Petróleos de Venezuela (PDVSA) also runs on a parallel budget through nine funds that support social welfare programs known as missions, as well as projects in agriculture, housing, infrastructure, industry and electric power. According to data supplied by the oil company, these special funds contributed over U$D 10 billion to social plans and production projects. (El Universal, 08-13-2011; http://www.eluniversal.com/2011/08/13/pdvsa-structures-parallel-expenditure-through-nine-special-funds.shtml)

National Assembly has authorized added expenditures jointly funded by China

The National Assembly has authorized an additional credit for projects jointly financed with China, which also draw upon the existing Long Range High Volume U$D 20 billion fund. It approved a special U$D 2 billion operation to be used for acquiring products for the “My Well Equipped Home” program, installing a household appliance factory, purchasing transport aircraft, expanding the port at Puerto Cabello and seven agricultural plans. More in Spanish: (El Universal; 08-16-2011; http://www.eluniversal.com/2011/08/16/autorizan-credito-a-planes-del-convenio-con-china.shtml)

Polling firm DATANÁLISIS says 62.7% perceive food supply negatively

According to a perception study conducted by DATANÁLISIS, 62.7% of Venezuelans have a negative view about the availability of foodstuffs in their usual shopping areas. 37% have a positive view 0.3% did not know or had no answer. During June, the reports shows consumers consider it more difficult to find products vegetable oils, corn and soy, milk powder, and wheat flour. More in Spanish: (El Universal, 08-15-2011; http://www.eluniversal.com/2011/08/15/627-de-la-poblacion-cree-que-el-nivel-de-abastecimiento-es-negativo.shtml)

CADIVI cut foreign exchange allocations to commerce in half

According to CADIVI, the agency responsible for distributing dollars at the official exchange rate of 4.30 bolivars allocations to the commercial sector have dropped off  50% as compared to the first semester 2010, falling from U$D 1,51 billion to 772 million. Foreign currency authorizations to import machinery and equipment fell by 44%. More in Spanish: (El Universal, 08-15-2011; http://www.eluniversal.com/2011/08/15/cadivi-recorta-a-la-mitad-la-asignacion-de-divisas-al-comercio.shtml)

Commodities

Venezuela Oil Falls to U$D 103.45

Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending August 5 fell to U$D 103.45 from the previous week's U$D 107.84, but still raising the average for the year to U$D 99.43. (Latin American Herald Tribune, 08-15-2011; http://www.laht.com/article.asp?ArticleId=413558&CategoryId=10717)

Venezuelan oil production and exports decreased in June to 2.77 million bpd from 2.79 million bpd a month earlier, according to the Ministry of Energy. This is the second lowest monthly average so far this year. Of the total amount, Venezuela exported 2.41 million bpd, down from 2.48 million bpd in May due to fewer sales of byproducts. (Veneconomy, 08-11-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27161&idc=4)

PETROPIAR increases daily oil output to 160,000 Barrels

Petróleos de Venezuela SA, the state oil company, says it has increased daily production of heavy crude oil at its Petropiar unit to 160,000 barrels. PETROPIAR, a joint venture with CHEVRON Corp., had daily production of 155,000 barrels during the second quarter and the unit expects to end the year producing 169,000 barrels a day. PDVSA, as the company is known, said it plans to increase daily output to 175,000 barrels in 2012. (Bloomberg, 08-14-2011; http://www.bloomberg.com/news/2011-08-14/pdvsa-s-petropiar-boosts-daily-heavy-crude-oil-output-to-160-000-barrels.html)

PDVSA shows mixed environmental record

Venezuela's state oil company PDVSA is reporting over 2,000 oil leaks in its 2010 management report, down from more than 8,100 the prior year. At the same time, Petróleos de Venezuela recorded 2,393 leaks of hydrocarbons and chemical products during 2010. From January to October 2009, the company recorded 8,124 such incidents. The company called the spills "undesirable events with an environmental impact" in its management report. The volume leaked was down from 182,000 barrels in 2009 to 121,000 barrels in 2010, a decline of more than 30%. (UPI, 08-12-2011; http://www.upi.com/Business_News/Energy-Resources/2011/08/12/PDVSA-shows-mixed-environmental-record/UPI-39691313142298/)

Blackout in northwestern Venezuela due to failure in power plant

After disruptions in the Isiro-Planta Centro power lines, a major blackout took place in the state of Falcón (northwestern Venezuela) after a power generation failure. The outage also hit the Paraguaná peninsula, despite the fact that this region is supplied by the Josefa Camejo power plant. The blackout, due to a failure in Planta Centro power plant, hit the 25 municipalities of the Venezuelan state. (El Universal, 08-15-2011; http://www.eluniversal.com/2011/08/15/blackout-in-northwestern-venezuela-due-to-failure-in-power-plant.shtml)

Logistics & Transport

Shipping freight costs to local ports

The shipping lines increased the cost of sea freight to Venezuela by 5%, according to a source close to the port activity, which reports carriers made the adjustment as a result of increased taxes and port charges that Bolivariana de Puertos (BOLIPUERTOS) began implementing in June. "It was to be expected with increased rates Bolipuertos," said the source consulted, adding that even before the adjustment freight shipping costs were more expensive than in other countries in the region. "Before the implementation of new port tariffs we had the most expensive costs in the region." More in Spanish: (El Universal, 08-15-2011; http://www.eluniversal.com/2011/08/15/navieras-elevaron-costos-de-fletes-hacia-puertos-locales.shtml)

Politics

Chavez returns from chemo recharged but cautious, seeks reelection with more votes than in 2004

President Hugo Chavez returned to Venezuela in the early hours of Sunday after undergoing a second round of chemotherapy in Cuba, sounding recharged and combative in a telephone conversation with state television. Chavez said he felt fewer side effects this time from the treatment and that his doctors will decide soon whether he needs a third session and also possibly radiation therapy. Seeking reelection, on Twitter he says; “Hey comrades, if we beat the opposition by 60% 7 years ago, in 2012 we must surpass this” (Reuters, 08-14-2011; http://www.reuters.com/article/2011/08/14/venezuela-chavez-idUSN1E77D05G20110814; More in Spanish: El Universal; 08-16-2011; http://www.eluniversal.com/2011/08/16/chavez-aspira-a-ser-reelecto-con-el-doble-de-votos-de-2004.shtml)

Reuters: Chavez seeks to contain voter angst over economy

Venezuela's economy is plagued by shortages, high inflation and crippling currency controls, but a massive spending spree by President Hugo Chavez will likely keep an incipient recovery alive, at least until a 2012 vote. Polls show support for the charismatic leftist leader has edged up since he announced in June he had cancer. But unless he can generate as much sympathy for his economic stewardship, his re-election bid could be at risk. In the short term, Chavez can paper over underlying problems with subsidies, price controls and ramped-up spending on his flagship health and housing programs for the poor. (Reuters, 08-15-2011; http://uk.reuters.com/article/2011/08/15/uk-venezuela-economy-idUKTRE77E3BU20110815)

National Assembly will investigate opposition funding

The National Assembly will investigate alleged foreign financing of the opposition Democratic Unity Board (MUD). The move was proposed by the head of the pro-Government United Socialist Party, Cilia Flores; and supported by opposition Assembly members. The Executive Secretary of MUD, Ramón Guillermo Aveledo, says they can investigate the organization “as many times as they want” and that all their actions are public. He added: “They will not distract MUD from its true objective which is to continue building a solid unity and a proposal for all Venezuelans in 2012”. Chavez, upon returning from Cuba, requested the investigation “politically and legally”, and accused the opposition of “creating an atmosphere aimed at questioning” their possible defeat in 2012. More in Spanish: (El Universal; 08-16-2011; http://www.eluniversal.com/2011/08/16/an-aprobo-por-unanimidad-investigar-a-la-mesa-unitaria.shtml  and  El Universal, 08-16-2011; http://www.eluniversal.com/2011/08/16/mesa-investigacion-no-desviara-la-unidad-ni-propuesta-para-2012.shtml)

Over 500,000 people migrated from Venezuela in 2010

A total of 521,000 Venezuelans sold their belongings, rented their houses, left the country with their scarce properties or migrated without any money in 2010. At the same time, over one million people migrated to the South American country, according to a report called "Migration and Remittances Factbook 2011" by the World Bank. The number of people emigrating accounts for 1.8% in a nation of h 29,322,327 inhabitants, according to demographic by the National Statistics Institute (INE). (El Universal, 08-15-2011; http://www.eluniversal.com/2011/08/15/more-than-500000-people-emigrated-from-venezuela-in-2010.shtml)

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.