October 19th, 2012

Economics & Finance

Devaluation inevitable

Ricardo Sanguino, the chairman of the Finance Committee, says there are no plans to make changes in the foreign exchange policy for 2013. However, a number of economists say that the government will be forced to devalue the bolivar in order to cope with the fiscal deficit, which some estimate could reach 19% of GDP by year-end. (Veneconomy, 10-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32450&idc=2)

Imports drop 6.57%

Data from the Foreign Exchange Administration Commission (CADIVI) shows that import permits, not counting operations through ALADI and the Sucre, have plunged 6.57%. Such limitations have had a negative impact on companies that depend on foreign currency to import raw materials and equipment for domestic output. For products regulated by the National Superintendent for Fair Costs and Prices (SUNDECOP), delays can remain for as many as 250 days. (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/venezuelan-regular-imports-drop-657)

Government plans to build housing units on 60,000 hectares

The government plans to acquire up to 60,000 hectares of land in order to meet goals set within the "Great Housing Mission - Venezuela," says Ricardo Molina, Minister of Housing and Habitat. The official explained that, so far, the government has 13,000 hectares of land, where 260,000 dwellings have been built since mid-April. (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/venezuelan-government-plans-to-build-dwellings-in-60000-hectares)

ELECAR bonds due in 2018 rally most since March

Bonds sold by state-owned utility Electricidad de Caracas rallied, pushing yields down the most since March 19, as investors sought the highest yield in Venezuela. Yields on the 8.5% bonds due in 2018 fell 53 basis points, or 0.53 percentage point, to 14.76% at 3:19 p.m. in Caracas, according to data compiled by Bloomberg. The bond’s price rose 1.64 cent to 77.04 cents on the dollar. “ELECAR offers the highest yield in Venezuela and is the farthest outlier on the Venezuela curve at over 14 percent,” says Russ Dallen, the head bond trader at Caracas Capital Markets in Miami. "It is being drawn back down toward the curve.” (Bloomberg, 10-17-2012; http://www.bloomberg.com/news/2012-10-17/elecar-bonds-due-in-2018-rally-most-since-march-caracas-mover.html)

Commodities

PDVSA expects total oil output at 3.13 mln bpd

State oil company PDVSA expects a total oil output at 3.13 million barrels per day (BPD) in 2012, according to Fadi Kabboul, executive director, corporate planning. The company's total oil output in the previous year was 2.975 million bpd. (Reuters, 10-17-2012; http://www.reuters.com/article/2012/10/17/pdvsa-oil-output-idUSI8E8KO01620121017; El Universal; http://www.eluniversal.com/economia/121017/venezuelas-oil-exports-to-asia-to-jump-to-28-million-bdp)

BAUXILUM again turns to GLENCORE for support

Swiss multinational GLENCORE may again come to the rescue of state owned CVB BAUXILIM, which now expects to receive U$D 31.6 million following their decision to establish an addenda to their standing contract or future alumina sales, which currently calls for them to supply GLENCORE with 1 million 400 of alumina through 2018. Industry directors were forced to do so due to lack of resources that has led to a drop in production. More in Spanish: (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/bauxilum-apela-a-nuevo-rescate-de-la-trasnacional-glencore)

SIDOR has had no exports for 4 months

Steel product exports from state owned SIDOR not only plunged 83.4% during the first semester this year, but they went down to zero June to September. More in Spanish: (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/sidor-tiene-cuatro-meses-sin-exportar-productos)

International Trade

Venezuela and Saudi Arabia hold talks on double taxation

Representatives of both governments have begun a second round of talks to review technical and legal issues as they seek to develop a working agenda. More in Spanish: (El Carabobeño, 10-18-2012; http://www.el-carabobeno.com/impreso/articulo/35754/venezuela-y-arabia-saudita-buscan-evitar-doble-tributacin)

Logistics & Transport

New port glitch

Ships are now being submitted to one-to-two day delays prior to leaving port, while the authorities make “sub-aquatic” inspections of departing vessels. (Veneconomy, 10-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32454&idc=3)

Miranda Satellite to register 350 images per day

A total 350 daily images may be registered by the Miranda Satellite on Venezuela's strategic areas, which would be used to speed up planning for agricultural, urban, industrial, environmental, hydrological, climate and frontier matters. (AVN, 10-18-2012; http://www.avn.info.ve/contenido/satellite-miranda-report-350-images-day)

Politics

Chavez should prepare for succession: Lula

According to former two-time Brazilian President Luiz Inacio Lula da Silva, Venezuela's newly re-elected president, Hugo Chavez, should start preparing to hand over powe. Lula made the statement in a newspaper interview published Thursday. Chavez, who says he has fully recovered from cancer, beat opposition challenger Henrique Capriles by 11 percentage points on October 7, giving him a third term. "There was an election in Venezuela, where two people ran, and I thought Chavez would be best for Venezuela. I also think that comrade Chavez should start preparing his succession," Lula, a close Chavez ally, was quoted as telling Argentine daily La Nacion. (Reuters, 10-18-2012; http://www.reuters.com/article/2012/10/18/us-venezuela-chavez-lula-idUSBRE89H12620121018; El Universal; http://www.eluniversal.com/nacional-y-politica/121018/brazils-ex-president-lula-chavez-should-be-working-on-his-succession; Bloomberg, http://www.bloomberg.com/news/2012-10-18/lula-urges-venezuela-s-chavez-to-groom-successor-la-nacion-says.html)

Venezuela reverses credentials of Paraguayan diplomats "in reciprocity"

The Venezuelan government reversed the "credentials and visas" of the Paraguayan diplomatic staff in reciprocity for the departure of Venezuelan diplomats from Paraguay, according to a source in the Venezuelan Foreign Office.

The same source confirmed that the reversal of the credentials is "just an administrative step" grandingfor the Paraguayan diplomatic staff " reasonable term" to leave the country after the departure of Venezuelan diplomats from Paraguay. (El Universal, 10-17-2012; http://www.eluniversal.com/nacional-y-politica/121017/venezuela-reverses-credentials-of-paraguayan-diplomats-in-reciprocity; http://www.eluniversal.com/nacional-y-politica/121017/venezuelan-dissent-eviction-of-paraguayans-disregards-diplomatic-pract; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-government-is-expelling-the-last-of-paraguays-diplomats-in-caracas-envoy-says/2012/10/17/57cbeab8-18ab-11e2-a346-f24efc680b8d_story.html; Fox News, http://www.foxnews.com/world/2012/10/17/venezuela-government-is-expelling-last-paraguay-diplomats-in-caracas-envoy-says/)

9,357 nominations for regional elections

The National Elections Board (CNE) has received 9,357 nominations of candidates running for governor and state assemblymen in the upcoming December 16th elections. 135 nominees were registered as candidates for 23 Governnorships. (AVN, 10-18-2012; http://www.avn.info.ve/contenido/9357-nominations-regional-elections)

NGO Director: no fraud, but "electoral corruption" on October 7

"There was no fraud on October 7, but electoral corruption by military officers," says Rocio San Miguel, Director of the Control Ciudadano NGO. She says that a document leaked by the Ministry of Defense shows tasks performed by National Guard officers in mobilizing the pro-government activists on Election Day, and includes testimony from grassroots activists, drivers, and motorcycle riders which should provide sufficient grounds for the Attorney General to conduct an inquiry into the matter. (El Universal, 10-16-2012; http://www.eluniversal.com/nacional-y-politica/121016/ngo-director-no-fraud-but-electoral-corruption-on-o-7)

October 11th, 2010

Economics, Trade & Business

Osorio: Polar and Cargill must go to the state

"Oligopolies do not ensure food security in the country and the Bolivarian government has seeking solutions to this problem for  11 years. There are two opposing extremes: the socialist and capitalist. Yankees’ attacks through their domestic lackeys have failed to halt the advance of the revolutionary laws. The Bolivarian government has made progress in these 11 years, despite capitalist and imperialist efforts." The speaker is not a stale leader of the radical left, but rather a general of the National Bolivarian Armed Forces. The People's Minister for Food, Carlos Osorio, is an example of the new era in Venezuela, in the process of building socialism. Companies like Polar and Cargill, as happened with Agroisleña should be in the hands of the state, said Osorio. The new coalition of forces in the National Assembly to be installed on January 5, 2011, will not be an impediment to the progress of the Revolutionary Government. (Correo del Orinoco, 10-11-2010; http://www.correodelorinoco.gob.ve/economia/osorio-polar-y-cargill-deben-pasar-a-manos-estado/)

Venezuela has seized about 185 industries in 2010

Carlos Larrazábal, the president of the Venezuelan Confederation of Industries (Conindustria), said that the Venezuelan government has seized at least 185 manufacturing companies in 2010, excluding firms in the agriculture sector. "We are concerned that the Venezuelan government will continue to seize companies without complying with Article 115 of the Constitution," Larrazábal said about the recent seizure of Agroisleña, Venoco and Fertinitro. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuela-has-seized_11A4591655.shtml)

Venezuela nationalizes Koch, Eni fertilizer plant

Venezuela's President Hugo Chavez nationalized a large U.S. and Italian-owned fertilizer factory on Sunday, just days after vowing to radicalize his state-led revolution in the aftermath of elections last month. The government will take over Fertinitro, one of the world's main producers of nitrogen fertilizer and part-owned by private U.S. company Koch and Saipem a subsidiary of Italy's Eni, Chavez said. During 12 years in power, the 56-year-old former soldier has put large swathes of the OPEC member country's economy into state hands. On Sunday, he also announced the nationalization of Venezuelan motor lubricants company Venoco. (Reuters, 10-10-2010; http://www.reuters.com/article/idUSN1026579720101011)

Venezuela's business sector asks top court for ruling on private property

Venezuela's private business association Fedecámaras will request that the Supreme Tribunal of Justice (TSJ) issue a ruling on the status of private property, said Noel Álvarez, the president of the Federation of Trade and Industry Chambers (Fedecámaras). "We are going to file an action with the TSJ for it to determine whether private property has been infringed or not," the business leader told private TV news channel Globovisión. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuelas-business_11A4591333.shtml)

Venezuela's government increases control over agricultural and industrial sectors

Venezuelan state policy to control the means of production was reinforced after President Hugo Chávez signed a decree expropriating Spanish farming supply firm Agroisleña, which provided supplies to 70 percent of the country's farmers before it was seized by the government. With  the seizure of Agroisleña, which was renamed Agropatria, the Venezuelan government aims at expanding and tightening the grip over food production. The first seizures of lands, which now total about 2.9 million hectares (7.17 million acres), were carried out at the end of 2004 with a series of expropriation decrees of farms located in the central state of Cojedes. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuelas-governme_11A4590051.shtml)

Nationalized agroindustry to offer products with discounts between 40 and 60%

The Venezuelan State company Agropatria (new name for the recently nationalized Agroisleña) will offer agricultural products at discounts between 40 and 60 percent, compared to the prices of said company when it was under private control. Agroisleña was nationalized on October 4 to put the company at the disposal of country’s agricultural development. During his weekly show “Alo, Presidente,” the Venezuelan Head of State ordered the reduction of 49.3% of the prices of 12 fertilizers, 43% the prices of 260 agrochemicals, and an average of 41.7% the prices of black beans, corn and rice seeds. (AVN, 10-11-2010; http://www.avn.info.ve/node/22405)

National Statistics Institute highlights Venezuelan inflation decreasing tendency

The President of the National Statistics Institute (INE) Elias Eljuri highlighted on Monday a deceleration of the inflation rate in Venezuela, estimating that the indicator will finish 2010 at about 27%, a figure well below the 40% predicted by “opposition” analysts. He reiterated that the inflation rate of 1.1% in September reflects this decreasing tendency and represents a significant reduction compared to the rate of 2.5% obtained in the same month last year. (AVN, 10-11-2010; http://www.avn.info.ve/node/22426)

Politics

Chavez backs China over Nobel for jailed dissident

Venezuelan President Hugo Chavez expressed solidarity with China's government Sunday over the awarding of the Nobel Peace Prize to a jailed Chinese dissident. He suggested the prize should not have gone to Liu Xiaobo, who has drawn praise from Western governments as an advocate of gradual political change without any violent confrontation with Chinese leaders. "This (Liu) is like Obama, the other peace prize," Chavez said. (Miami Herald, 10-10-2010; http://www.miamiherald.com/2010/10/10/1866972/chavez-backs-china-over-nobel.html)

The wave continues to swell

Since the appearance of the computers belonging to Raúl Reyes in 2008, the wave of compromising evidence indicating that the Hugo Chávez administration has ties with the narco-terrorist group, the Revolutionary Armed Forces of Colombia (FARC), has not ceased to grow. Now, this year, new facts have emerged that would seem to corroborate the high level of collaboration maintained by the Venezuelan Government not only with the FARC, but also with terrorist groups such as the National Liberation Front (ELN), and Euskadi Ta Askatasuna (ETA). On July 22, Álvaro Uribe presented accusations against Hugo Chávez before the International Criminal Court (ICC) and filed a lawsuit against the Bolivarian Republic of Venezuela before the inter-American Court of Human Rights (IACHR). (Veneconomy, 10-11-2010; http://www.veneconomy.com/site/?ids=44&idt=23417&idc=4)

Venezuelan opposition reinvents itself

Venezuelan opposition leaders have realized that unity works. They support this idea and they highlight this fact from their different political views. Ramón Guillermo Aveledo, the executive secretary of the Democratic Unified Panel (MUD), says that it is the best course to follow in the coming years. "Unity has proven successful. Unity -as people demand and as political success requires - has been endorsed by the successful election results," he said. According to Aveledo, they are now faced with a new challenge: proposing a real agenda to both slums and affluent residential areas. Such agenda should include "the fight against crime and against the high cost of living and the protection of private property." (El Universal, 10-08-2010; http://english.eluniversal.com/2010/10/08/en_ing_esp_venezuelan-oppositio_08A4577251.shtml)

ETA members claim they were trained in weapons use in Venezuela

The government of Venezuela's President Hugo Chávez has decided to launch an investigation into the activities of ETA activist Arturo Cubillas Fontán after it emerged that he provided weapons training to Xabier Atristain and Juan Carlos Besance, two alleged members of Basque terrorist group ETA, in Venezuela in 2008. (El Universal, 10-08-2010; http://english.eluniversal.com/2010/10/08/en_ing_esp_eta-members-claim-th_08A4582691.shtml)

Petroleum & Energy

Venezuela approves China's stake in Orinoco Oil Belt

Venezuela has approved China's stake in a joint venture to tap up to 400,000 barrels per day of extra-heavy crude oil in the Orinoco Oil Belt, under an agreement published in Venezuela's Official Gazette on Monday.
The Venezuelan government has negotiated several oil interests in the Junín block with companies from China (CNPC), Russia (Rosneft), Vietnam and Italy (ENI) after it completed a successful bidding of two multimillion projects in the Carabobo block of Venezuela's Orinoco belt. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuela-approves-c_11A4591291.shtml)

Domestic gas market requires over 2,000 million additional cubic feet (MMcf) -excluding what is demanded by the oil industry-  to satisfy domestic demand. This means production would have to double. PDVSA consumes 71% of the 7,000 MMcf a day of national production. (Veneconomy, 10-11-2010; http://www.veneconomy.com/site/?ids=44&idt=23417&idc=4)

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.