February 10th, 2011

Economics & Finance

S&P holds Venezuela ratings at BB-/B

S&P on Wednesday affirmed its BB-/B foreign and local currency sovereign credit ratings with a "stable" outlook on Venezuela. The affirmation also covered the BB- transfer and convertibility assessment. The service said the country's solid external and fiscal positions are major rating strengths while its unstable political environment, immature legislation, price and foreign exchange controls and other unpredictable economic measures are rating weaknesses. In addition, frequent seizure of private companies by the state hampers private investments and productivity, the service noted. (ADP News, 02-10-2011; http://adpnews.info/?nid=4156d030ed0b847b)

Venezuela’s inflation accelerates after forex adjustment

Inflation in Venezuela is on an upward trend, as appears from the numbers released on Tuesday by the Central Bank of Venezuela (BCV), which show a 2.7 percent increase in the consumer price index. This rise was due to several reasons, but the exchange rate adjustment was the main factor. In a scenario where the government promised that the unification of the two-tier exchange rate at VEB 4.30 per US dollar in December 2010 would not damage the price of food items and health services, reality shows otherwise, according to Venezuelan economist Pedro Palma. (El Universal, 02-09-2011; http://english.eluniversal.com/2011/02/09/en_eco_esp_venezuelan-inflation_09A5137457.shtml)

Inflation rose 2.7% in January, nearly one percent point higher than the rate last December (1.8%) and a whole point higher than the rate in January 2010. The inflation rate in the last 12 months is 28.5%, the highest in the region.

(Veneconomy, 02-08-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24832&idc=2)

Agricultural prices rose by 68 percent in 12 months

Data released by the Central Bank of Venezuela (BCV), shows the rising cost of food is unstoppable. This variable has the strongest impacts on the quality of life in the poorest Venezuelan households. The cost of agricultural products in January rose 9.1 percent and over the past twelve months, the cumulative increase in prices reached 68 percent. The BCV showed that the price of vegetables was up 11.1 percent, and it played the main role in the hike of food prices, in general. Food prices were up 4 percent in January and 37.3 percent in the last 12 months. This is the highest jump in the Latin American region. (El Universal, 02-09-2011; http://english.eluniversal.com/2011/02/09/en_eco_art_prices-of-agricultur_09A5136453.shtml)

Commodities

Venezuela's PDVSA offers $3 billion 2022 bond

Venezuela's state oil firm PDVSA offered on Wednesday a new $3 billion 2022 bond which it said was intended to raise funds for its investments in the South American OPEC member nation. In a statement on its web site (www.pdvsa.com), the company said the dollar-denominated paper would have a coupon of 12.75 percent and price at 100 percent. The bond - offered first to companies in Venezuela's "productive sector" - can be purchased at the lowest official exchange rate of 4.3 bolivars to the dollar and then traded abroad in dollars, PDVSA added. (Reuters, 02-09-2011; http://www.reuters.com/article/2011/02/10/venezuela-bond-idUSN0922934020110210)

Barclays Capital: Pdvsa cash flow plunging, short USD 20 billion in cash

The cash flow of state-run oil company Petróleos de Venezuela's will plunge due to the preferential financial conditions granted by Venezuela and the exchange of crude oil and products for goods and services. According to a report issued by Barclays Capital, Pdvsa "will not receive in cash USD 9.4 billion in 2011 and USD 10.7 billion in 2012" due to the export agreement with Cuba and a 50 percent discount in the total invoice value of Venezuelan oil exports to the Caribbean countries (under the PETROCARIBE cooperation agreement). Figures include preferential terms such as long-term funding, and the mandatory payments on loans granted by the bilateral Chinese Fund. As a result, Pdvsa will not receive USD 20.1 billion in cash between 2011 and 2012. (El Universal, 02-09-2011; http://english.eluniversal.com/2011/02/09/en_eco_esp_barclays-capital:-pd_09A5136573.shtml)

Venezuela's PDVSA claims Jan-Sept 2010 profit up 35 pct

Net profit at Venezuela's state oil company PDVSA rose 35 percent to $3.455 billion in the first three quarters of 2010, compared with the same period of the previous year, the company said on Thursday. PDVSA's total financial debt was $22.1 billion at the end of September last year, 0.8 percent higher than at the end of 2009, the company said. The results were a sharp improvement on the first half of 2010, when PDVSA said net profit fell 14 percent after it hiked payments to the state more than 1,200 percent. (Reuters, 02-10-2011; http://www.reuters.com/article/2011/02/10/venezuela-pdvsa-idUSN1018763820110210)

Survey finds global oil production and prices up

An analysis found January oil production from OPEC members reached levels not seen for more than two years as the crisis in Egypt affects prices. Results from a survey by the Platts news agency indicated that oil production from Organization of the Petroleum Exporting counties averaged slightly more than 29 million barrels per day in January, up 300,000 bpd from December and the highest level in more than two years. The survey found that production declines from Iran and Nigeria were balanced by increased production in Angola, Kuwait, Saudi Arabia, the United Arab Emirates and Venezuela. (UPI, 02-10-2011; http://www.upi.com/Science_News/Resource-Wars/2011/02/10/Oil-production-and-prices-up-survey-finds/UPI-46811297345884/)

Alcasa and Venalum aluminium smelters are operating at minimum levels

Negotiations in Caracas by union leaders at CVG Venalum, a Venezuelan basic industry, were unsuccessful. Demonstrations at the aluminum smelter on Monday and workers blocked the access gates of the plant. As a result, operations remain at a minimum level. (El Universal, 02-08-2011; http://english.eluniversal.com/2011/02/08/en_eco_art_aluminum-smelters-al_08A5131571.shtml)

Mayor in Barinas says Venezuela will launch an ethanol plant there by end-2011

Venezuela's government plans to inaugurate in late 2011 a plant in the western Barinas state that will be able to produce 700,000 litres (184,900 gallons) of ethanol per day. Joel Meneses, mayor of the Pedro Manuel Rojas municipality said the plant is being built in the Pedro Manuel Rojas municipality, with Cuban technology as part of a bilateral agreement. The project could benefit communities in the states of Barinas, Portuguesa and Cojedes. The plant is part of a complex, which will include also a 10,600-ton sugar cane mill, storage facilities and a 50 MW power plant. (ADP News, 02-10-2011; http://adpnews.info/?nid=e0607c4806d6aebf)

Politics

VP Jaua says the Government met five serious crises during 2010: energy, banking, rains, mortgage frauds and relations with Colombia

In his speech to the National Assembly on Tuesday, Venezuelan Executive Vice President Elias Jaua highlighted the way the Bolivarian Government overcame successfully five serious crises and he affirmed that only together people and state-run agencies were able to face such situations without negative results, even though attempt of the Right to “take advantage of adversities to generate a climate of hope and send messages of popular defeat.” The Bolivarian Government managed to overcome successfully crises in matters of energy, banking, bilateral relations with Colombia, as well as emergencies in matters of rains and mortgage frauds. He said they were able to overcome these situations and turn them into development opportunities for the population, thanks to reliable and efficient policies implemented by the Executive. (AVN, 02-09-2011; http://www.avn.info.ve/node/42394)

Rousseff seeks to continue Brazil’s close ties With Chavez

Brazil’s President Dilma Rousseff and her Venezuelan counterpart Hugo Chavez will continue the tradition of holding quarterly meetings to discuss trade and social issues, Brazil’s Foreign Minister Antonio Patriota said in Caracas.

“My presence here is to reaffirm Brazil’s pledge to strengthen our bilateral relationship,” Patriota said in comments carried on state television while he met with Venezuela’s Foreign Minister Nicolas Maduro. (Bloomberg, 02-07-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aiDV8eKz3BUo)

Fiber-Optic undersea cable from Venezuela Reaches Cuba

Cuban Computer Science and Communications Minister Medardo Diaz said the undersea cable that arrived on Cuba’s eastern coast on Tuesday after a 19-day voyage from Venezuela, “opens a breach in the (economic) blockade” that the United States has imposed on the island and bolsters “national sovereignty” in telecommunications. (Latin American Herald Tribune, 02-09-2011; http://www.laht.com/article.asp?ArticleId=386513&CategoryId=10718)

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.

February 8th, 2011

Economics & Finance

Economist claims Venezuela’s Central Bank official figures show red

The transfer of international reserves to the National Development Fund (FONDEN) in the past five years has used up assets from the Central Bank of Venezuela. According to economist José Guerra, the institution´s balance, published two days ago, shows a capitalization of 64.3 billion Bolivars. According to the official report, total assets of Bs.207.5 billion add up to. However, this total amount includes reserves transferred to the FONDEN, which total 73.6 billion Bolivars since 2005. These transfers are no longer in the hands of BCV but are part of the fund used to finance the Executive, so they cannot be included as assets, according to Dr. Guerra. More information in Spanish. (Reportero 24; 02-08-2011; http://www.reportero24.com/2011/02/finanzas-bcv-se-descapitaliza-y-presenta-numeros-en-rojo/)

Macroeconomic Stabilization Fund turns over USD 832 million to Venezuela's Executive

About two weeks ago, Venezuela's President Hugo Chávez asked Rafael Ramírez, the president of state-run oil company Petróleos de Venezuela (Pdvsa), to transfer USD 500 million from the Macroeconomic Stabilization Fund (FEM), from the USD 832 million that Pdvsa held in the Central Bank of Venezuela (BCV). Chávez said that the money would be spent to build houses and refurbish shelters for people made homeless by heavy rains. The latest numbers released by the BCV indicate that the state-run oil company withdrew USD 829 million from the Macroeconomic Stabilization Fund (FEM). (El Universal, 02-04-2011; http://english.eluniversal.com/2011/02/04/en_eco_art_fem-transfers-usd-83_04A5113291.shtml)

Government considers transferring exchange functions to the Bicentennial Public Securities Exchange Market (BPVB, after its initials in Spanish) in the short term, according to sources within the Venezuelan Planning and Finance Ministry. (Veneconomy, 02-04-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24771&idc=2)

Average household income fell by 8% during 2010

Economic difficulties and rising prices in goods and services were the common denominators in a year in which household income plummeted for the first time since 2003. According to the numbers produced by the National Statistics Institute (INE), by the first half of last year, household monthly income averaged USD 743.62, versus USD 621.24 the previous year. In nominal terms, it was a 19.7-percent growth. However, inflation added, in 2009-2010 there was a real drop at 8.3 percent. (El Universal, 02-04-2011; http://english.eluniversal.com/2011/02/04/en_ing_esp_average-household-in_04A5099091.shtml)

Declining trade reported in Venezuela

Trade has not recovered in Venezuela, said Fernando Morgado, the president of the Venezuelan Council of Trade and Services (Consecomercio). "We have seen that the downward trend in trade continues," Morgado said during a meeting of the board of director of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras). With regard to the supply of food products in the domestic market, the businessman said that policies implemented by the government continue to hit manufacture, distribution, and marketing of different goods. (El Universal, 02-07-2011; http://english.eluniversal.com/2011/02/07/en_eco_art_warnings-against-dec_07A5127491.shtml)

Paraguayan congress puts price to Venezuela’s Mercosur incorporation

The Paraguayan political system is willing to consider the incorporation of Venezuela to Mercosur as a full member if there is a “significant gesture or compensation” from the government of President Hugo Chavez, according to congressional sources in Asunción. (MercoPress, 02-05-2011;  http://en.mercopress.com/2011/02/05/paraguayan-congress-puts-price-to-venezuela-s-mercosur-incorporation)

Paraguay supports Colombia’s bid to join Mercosur

Colombia’s request to formally join Mercosur will be addressed during the group’s next summit to be held in Paraguay June 24th, revealed Paraguayan Foreign Affairs minister Hector Lacognata. (Latin Daily Financial News, 02-01-2011; http://www.latindailyfinancialnews.com/index.php/en/politics/world/7710-paraguay-supports-colombias-bid-to-join-mercosur.html)

Commodities

Venezuela´s export barrel average up to $87.60/bbl. this week, up $3.65 from last week, said the Venezuelan Energy and Oil Ministry on Friday. The average for the year-to-date is $85.71/bbl., up $13.02/bbl. compared to 2010. (Veneconomy, 02-04-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24782&idc=4)

Venezuela's oil exports to the US rise to 1.38 million bpd

Venezuela's crude oil exports to the United States bounced back in the last week of January, up 34 percent compared to average exports in January 17-21. Venezuelan oil exports to the US in the week between January 24 and 28 averaged 1.38 million barrels per day (bpd), according to figures provided by the Energy Information Administration (EIA), the statistical arm of the US Department of Energy. The previous week, Venezuela's total crude oil exports amounted to 1.03 million bpd. Preliminary figures showed that in January Venezuelan oil exports to the United States averaged 998,000 bpd. (El Universal, 02-04-2011; http://english.eluniversal.com/2011/02/04/en_eco_esp_venezuelas-oil-expo_04A5112891.shtml)

Venezuelan oil minister: $200 oil possible

Crude oil prices could more than double if the unrest in Egypt forces the closure of the Suez Canal, Venezuelan Oil Minister Rafael Ramirez said, according to a Bloomberg News report. A disruption of shipments along the waterway would prompt a meeting by the Organization of Petroleum Exporting Countries “because oil could reach $200 a barrel,” Ramirez told reporters today in Caracas. A $200-a-barrel oil price would easily eclipse the all-time high of $147 a barrel reached in July 2008 and would be roughly double today's prices. A large, sustained rise in oil prices could send retail gasoline prices well above $4 a gallon in the U.S. (Blogs Star Telegram – Barnett Shale, 02-04-2011; http://blogs.star-telegram.com/barnett_shale/2011/02/venezuelan-oil-minister-200-oil-possible-.html)

Venezuela Terminates Crystallex - Canada Miner Mulls Legal Action

Canadian gold miner Crystallex International Corp said that a state-owned Venezuelan company unilaterally decided to end their contract on Las Cristinas project, their largest asset. The Venezuelan company, Corporación Venezolana de Guayana, claimed that Crystallex had not done enough to advance the project, according to a Crystallex statement on Sunday. Crystallex disputed that assertion, saying it had met all of its obligations under the contract and had worked to ensure the project was "shovel ready" while awaiting a permit from Venezuela's Ministry for the Environment and Natural Resources. (Reuters, 02-06-2011; http://www.reuters.com/article/2011/02/06/crystallex-idUSN0617093420110206)

Rusoro eyes Venezuela mine after Crystallex exit

Russian-Canadian miner Rusoro is eyeing Venezuela's Las Cristinas gold project after President Hugo Chavez's government canceled Crystallex International's permit, sending its shares down 35 percent. The mine, south of the Orinoco river and near a town bearing the name of the mythical golden city of El Dorado, may hold Latin America's biggest gold deposits, studies have shown. But a decades-old saga over its development underlines the risks of doing business in Venezuela, where the lure of vast natural resources has been dulled by rule changes, economic difficulties and Chavez's "21st century socialism" project. (Reuters, 02-07-2011; http://www.reuters.com/article/2011/02/07/venezuela-gold-idUSN0722524820110207)

Gold´s share in Venezuela’s total reserve rises to 12%, while foreign currency share drops by 37%

Venezuela’s central bank increased its share of gold reserves 12 percent during the second half of 2010 while its reserves in foreign banks fell 37 percent in the period, according to the bank’s year-end financial report. The bank’s gold reserves increased to 42.4 billion bolivars ($9.86 billion) at the end of 2010 from 37.3 billion bolivars at the end of June, the bank report said. The central bank’s reserves held in foreign banks fell to 7.32 billion bolivars by year-end from 10 billion bolivars in June. (Bloomberg, 02-05-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=auvgUpD6iV_U)

PDVSA announces it will launch six agro-industrial complexes during 2012

Two sugar plants and four agro-industrial complexes to process ethanol and other sugar cane products will be inaugurated by PDVSA Agricola next year, informed Egly Ramirez, president of the Venezuelan state-run oil company subsidiary. “We are working intensively to inaugurate them in 2012. The budget has been approved, the works show great progress and we are currently in the construction stage,” he stated. The six complexes, built simultaneously in different zones of the country, will allow the Venezuelan Government to strengthen the domestic production of sugar, increase the production of balanced food for animals and make incursion into the processing of ethanol and sugar cane derivatives. The two sugar plants would have the capacity to process 7,000 tons of cane per day each. (AVN, 02-06-2011; http://www.avn.info.ve/node/41867)

Politics

Chavez seeking third six-year term

Venezuelan President Hugo Chavez, beset by an economic slowdown for the second consecutive year, announced he would fight on and seek re-election next year for a third six-year term. Chavez suffered setbacks in last year's National Assembly elections that depleted his comfortable majority but, as widely anticipated, he reacted by saying he wouldn't hesitate to issue a presidential decree if and when he faced opposition on a particular issue. (UPI, 02-03-2011; http://www.upi.com/Top_News/Special/2011/02/03/Chavez-to-fight-on-for-a-third-six-year-term/UPI-73841296765848/#ixzz1DHYuvgCy)

Strict timetable is set for National Assembly to grill three ministers on annual report

Three government ministers will appear before Parliament next week to face questions. National Assembly president, Fernando Soto Rojas has made it clear that questions to the ministers should be to the point. Each deputy will be given five minutes to put a question and get an answer. (VHeadline, 02-04-2011; http://www.vheadline.com/readnews.asp?id=100811)

Land redistribution is a clear priority in Venezuela after 12 years of Revolution

One of the most significant achievements in these 12 years of Bolivarian Government is the clear intention regarding lands redistribution and the planning for the agricultural development, said the Agriculture and Lands Minister Juan Carlos Loyo. “The Bolivarian Revolution brought with it the awakening, a spirit of freedom, the knowledge of what the values are and represent on the vision people had up to midst 90s, when nobody dared to express an own opinion, debate and only allowed minorities to make decisions for the majorities,” he said. (AVN, 02-06-2011; http://www.avn.info.ve/node/41907)

An American seems to have the President’s ear in Venezuela

Slip into Librerías del Sur, a chain of state bookstores. Read a state newspaper. Turn on state television. Listen to state radio. Eva Golinger, a New Yorker who speaks Spanish with a thick American accent, seems to be expounding everywhere these days on the threats to this country’s so-called “Bolivarian revolution.” Welcomed into President Hugo Chávez’s fold to such an extent that she accompanied him on a recent trip to Iran, Libya and Syria, Ms. Golinger, a lawyer who first came to Venezuela in the 1990s to research her family’s history, has created a unique niche for herself here: an American with the president’s ear. (The New York Times; 02-04-2011; http://www.nytimes.com/2011/02/05/world/americas/05venezuela.html?_r=1&scp=2&sq=venezuela&st=cse)

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.

February 2nd, 2011

Economics & Finance

CONINDUSTRIA reports 623 "attacks" on private businesses over the past nine years

From January 2002 to January 2011, 623 attacks on business property have been recorded, as estimated by the Venezuelan Council of Industries (CONINDUSTRIA). "Between 2005 and 2005, 14 attacks were perpetrated on private property; one in 2006; 126 in 2007; the following year, it lowered to 25. In 2009, there were 139 events; 287 in 2010 and thus far in 2011, the number is 31 events," CONINDUSTRIA broke down in a press release. Based on this count, seizures and State appropriation of formerly private assets have escalated over the past two years. "Interestingly, 70 percent of these records have been generated in 2009-2011." (El Universal, 02-02-2011;

 http://english.eluniversal.com/2011/02/02/en_eco_esp_a-total-of-623-atta_02A5099131.shtml)

A new Government sponsored Stock Exchange will rival the private Caracas exchange

Planning & Finance Minister Jorge Giordani has been promoting the new public stock exchange that opened for business last Monday. “It’s a new kind of financial system”, he said, “aimed at uniting savers with investors working in the productive field”. The Bicentenary Public Stock Exchange was established after the government overhauled the highly speculative financial system operating through brokerage houses and a private stock exchange that continues to exist. Savers are now able to operate at a fixed or variable rate on the new market that is transparent and regulated by the State. (VHeadline, 02-02-2011; http://www.vheadline.com/readnews.asp?id=100737)

Venezuelan Government indebtedness to local banks rose by 50% during 2010

Despite an average oil price – the main source of revenue - pegged at $ 72 per barrel during 2010, the Venezuelan Government required additional funding for its expenditures and resorted to borrowing locally. More information in Spanish. (El Universal, 04-02-2011;

http://www.eluniversal.com/2011/02/04/eco_art_en-2010-la-deuda-del_2181882.shtml)

Strike shuts down HEINZ plant

A plant run by HEINZ in the state of Carabobo, north central Venezuela was shut down by workers, who demanded the signing of their collective bargaining agreement. "The company believes that we are still living the era of Juan Vicente Gómez (a Venezuelan ruler from 1908 to 1935) and believes that workers are going to live on VEB 10 or 15 a day (USD 2.30-3.50)," said union leader Edison García. Meanwhile, in a statement, HEINZ declared that "these people have not only started an illegal strike, but also they have prevented workers from entering the facilities. Therefore, production of ketchup, baby food, jelly and other key products in the Venezuelan market has been halted." (El Universal, 01-02-2011; http://english.eluniversal.com/2011/02/01/en_eco_art_workers-close-heinz_01A5091131.shtml)

Commodities

OIL FUTURES: Crude Falls On Dollar Strength; Egypt In Focus

Crude oil futures fell Thursday as the U.S. dollar rallied, even as traders remain focused on escalating violence in Egypt and the prospect of supply disruptions. Light, sweet crude for March delivery settled 32 cents, or 0.4%, lower at $90.54 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded down 58 cents, or 0.6%, at $101.76 a barrel. Oil prices turned negative on a stronger U.S. dollar against the euro, after European Central Bank President Jean-Claude Trichet indicated that the central bank isn't ready to raise interest rates. (The Wall Street Journal, 03-02-2011; http://online.wsj.com/article/BT-CO-20110203-718885.html)

Reports indicate PDVSA is buying oil from third parties to meet commitments

Purchase of crude oil and byproducts to third parties by PDVSA increased to $14,620 million at the end of the first semester of 2010 from $9,915 million in the same period the year before, according to data from its financial statements. (Veneconomy, 03-02-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24760&idc=4)

Venezuela to supply petcoke to Turkey in exchange for housing construction

Venezuela has proposed to supply Turkey with petcoke in exchange for the construction of 5,000 to 10,000 houses in Venezuela's eastern state of Anzoátegui. Pedro León, the director of state-run oil company Corporación Venezolana de Petróleo (CVP), said that the proposal is based on a bilateral agreement signed by the Minister of Energy and Petroleum Rafael Ramírez and president of state-run oil company Petróleos de Venezuela SA (Pdvsa), Rafael Ramírez, in a recent visit to Turkey. (El Universal, 02-02-2011; http://english.eluniversal.com/2011/02/02/en_eco_art_venezuela-to-supply_02A5097931.shtml)

Chavez predicts the Government food program will increase monthly distribution to 300,000 tons

Venezuelan President Hugo Chavez said that the National Government seeks to increase the monthly food distribution from 170,000 tons up to 300,000 tons, by means of the state-run marketing network, made by grocery stores Mercal, PDVAL and Abastos Bicentenarios. President Chavez spoke during a visit to the facilities of a PDVAL grocery store in Caracas, amid celebrations of the 12th anniversary of the Bolivarian Revolution. He explained his administration is working on an extraordinary plan in food matters. “I have already approved resources for plans to expand the mission. This year, we will increase food distribution from 170,000 tons to 300,000 tons to give more life to people.” (AVN, 02-02-2011; http://www.avn.info.ve/node/41318)

Chavez says 176,000 farmers have enrolled in Mission Agro Venezuela

Venezuela's President Hugo Chávez reported that 176,000 growers have been enrolled in Mission Agro Venezuela, according to the latest cut-off estimated midday on Wednesday. "Thanks to all, Mission Agro Venezuela is a major success, because we ought to produce what we consume, diminish import, increase domestic production and then even export," President Chávez said. (El Universal, 02-02-2011; http://english.eluniversal.com/2011/02/02/en_eco_art_a-total-of-176,000-g_02A5098653.shtml)

Logistics & Transport

Import costs increase because of irregularities at BOLIPUERTOS

Importers have been experiencing a significant increase of their administrative and storage costs within customs as a result of the operational irregularities at La Guaira sea port, which is being managed by Bolivariana de Puertos (BOLIPUERTOS) since mid-2009. (Veneconomy, 01-02-2011;

http://www.veneconomy.com/site/index.asp?idt=24723&idc=3&ids=44&Var_Send=1&mmD=02&ddD=01&mmH=02&aaD=2011&ddH=02&aaH=2011&Send=Find)

Imports decline as importers face uncertainties on price adjustments

The flow of bulk cargo that arrives through the port of Puerto Cabello ebbed during the first month of 2011. More information in Spanish. (El Universal, 04-02-2011; http://www.eluniversal.com/2011/02/04/eco_art_incertidumbre-sobre_2181885.shtml)

Politics

Venezuela: Chávez in re-election bid after 12 years in office

President Hugo Chávez, marking his 12th anniversary in power, said he was prepared to campaign for six more years in office. In a televised speech, Mr. Chávez said that “the battle has begun” for the election in 2012. And in visits to a school and a state-run supermarket, he promoted his programs and agenda. He also apologized for errors; saying much remained to be done as he sought to lead Venezuela toward socialism. While the president is facing problems like rising crime and 27 percent inflation, the opposition has yet to select a candidate to run against him. (The New York Times, 02-02-2011;

 http://www.nytimes.com/2011/02/03/world/americas/03briefs-Venezuela.html?_r=1&scp=4&sq=Venezuela&st=cse)

Polling firm: Only 23 percent of respondents support a Chávez reelection in 2012

Luis Vicente León, the director of Caracas-based polling company DATANÁLISIS, said that bimonthly polls conducted by his firm show that President Hugo Chávez's popularity still holds at 50 percent. León added that although pro-Chávez votes dropped in regional elections, his popularity has increased again as the ruling party is implementing an unwavering and improved political campaign. The economist stressed that Chávez's campaign is deployed in mandatory nationwide radio and TV broadcasts, his weekly talk show “Hello, President”, billboards, testimonial TV ads about the president's performance. Additionally, the Venezuelan president is implementing a "much more populist strategy that highlights the gap between the rich and the poor -a strategy that has helped him boost people's support and polarize Venezuelan society." According to the poll, 23 percent of respondents support Chávez's reelection. (El Universal, 02-02-2011; http://english.eluniversal.com/2011/02/02/en_pol_art_polling-firm:-23-per_02A5097291.shtml)

Reuters projects key political risks in Venezuela

According to Reuters, political disputes over when President Hugo Chavez will give up decree powers, jockeying ahead of the 2012 presidential election and a weak economy are the main political risks to watch in Venezuela.

Chavez is expected to use his decree powers for more nationalizations. He has already said more private land needs to be turned over to build houses for the poor, and has warned banks that they must help finance his social programs or face expropriation. A new banking law passed in December made takeovers in the financial sector easier. (Reuters, 01-02-2011; http://www.reuters.com/article/2011/02/01/venezuela-risks-idUSRISKVE20110201)

Chávez promises more personal safety for Venezuelans

Venezuela's President Hugo Chávez said on Wednesday that in the same way that his government is committed to provide food, housing and education to every Venezuelan he wants to provide security to his fellow citizens. "We must ensure that every Venezuelan walks in the streets without fear of being mugged, being shot or being hit," Chávez said. "We have been making significant progress" in personal security,” he said. (El Universal, 02-02-2011;

http://english.eluniversal.com/2011/02/02/en_pol_art_chavez-promises-to-e_02A5097733.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.

January 31th, 2011

Economics, & Finance

Expert charges Venezuela’s Central Bank conceals information on government funding

For the last 12 months, the Central Bank of Venezuela (BCV) has not supplied information on the sources of the monetary base, a key indicator to assess economic performance. Among others, the sources of the monetary base show if the BCV has financed the government or state-owned companies, such as the oil holding Petróleos de Venezuela (Pdvsa). "The monetary base collects the creation of money; shows if there has been funding to the public sector. This is the first time that the BCV hides such statistics. It did not happen even under the government of General Marcos Pérez Jiménez," said José Guerra, former BCV manager of economic research. (El Universal, 01-28-2011;

 http://english.eluniversal.com/2011/01/28/en_ing_esp_central-bank-of-vene_28A5058171.shtml)

Markets view Venezuela as a high-risk country despite high oil prices

Since oil prices are climbing, thus ensuring enough funds for Venezuela to meet its obligations, investors should view Venezuela as a low-risk country. However, the lack of confidence in the South American nation lingers. Venezuela's country risk -an indicator of the spread between the yield an investor demands in order not to buy US Treasury bonds and purchase instead Venezuelan sovereign bonds- started the week at 11 percent. This figure exceeds by far Chile's 1.16 percent; Peru's 1.48 percent; Colombia's 1.49 percent; Mexico's 1.64 percent; Brazil's 1.75 percent; Argentina's 4.95 percent and Ecuador's 8.41 percent. Low country-risk is important for developing countries to borrow money in international markets at a lower cost and attract foreign investments, a prerequisite for improving job creation and technology breakthroughs. (El Universal, 31-01-2011;

http://english.eluniversal.com/2011/01/31/en_eco_esp_markets-view-venezue_31A5080811.shtml)

National Assembly Finance Committee Chairman says Government analyzing tax changes under Enabling Law. More information in Spanish. (Entorno Inteligente, 01-31-2011;

http://www.entornointeligente.com/resumen/resumen.php?items=1087193)

Commodities

OPEC Would Act If Egypt Crisis Disrupts Supplies

The Organization of Petroleum Exporting Countries said Monday it would increase output if the Egyptian crisis lead to supply disruptions but sees this situation as unlikely, the OPEC secretary-general said. (Nasdaq, 01-31-2011; http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201101310958dowjonesdjonline000167&title=update-opec-would-act-if-egypt-crisis-disrupts-supplies--head)

There are 233 working drilling rigs permanently in Venezuela at the moment, according to PDVSA president and Energy and Oil Minister Rafael Ramírez. He said the goal is to get to 240 drilling rigs. (Veneconomy, 01-28-2011; http://www.veneconomy.com/site/index.asp?idt=24681&idc=4&ids=44&Var_Send=1&mmD=01&ddD=28&mmH=01&aaD=2011&ddH=31&aaH=2011&Send=Find)

The rapid decline of PDVSA is reported

What is the production of Petróleos de Venezuela (PDVSA), the state-owned oil company of Venezuela? The company claims a production of 3.2 million barrels per day, although OPEC and the International Energy Agency place it at 2.3 million barrels per day, almost one million barrels per day less. This is a huge discrepancy that has already persisted for a long time. The level of commercial oil exports is also in doubt since Venezuela is consuming over 600,000 barrels per day internally and is sending highly subsidized oil to Cuba, Nicaragua, Bolivia, Ecuador, Argentina, Central America and the Caribbean countries. (Latin Business Chronicles, 01-28-2011;

 http://www.latinbusinesschronicle.com/app/article.aspx?id=4755)

Venezuela may review licenses granted to foreign oil companies

Venezuela would review the rights granted to foreign oil firms to operate in the South American country in joint ventures with state-run oil company Petróleos de Venezuela (Pdvsa) if they fail to increase output, warned Venezuela's Minister of Energy and Petroleum Rafael Ramírez. In December, amid a decline in oil production in Venezuela -where more than 90 percent of revenues come from oil exports- the Ministry of Energy and Petroleum asked oil joint ventures to increase oil output, Reuters reported. In December, Venezuela requested oil firms to present a schedule to raise output within a period of 30 working days. "If they fail to comply with their schedules, I would have enough grounds to review the rights that were granted," Ramírez said. (El Universal, 01-28-2011;

 http://english.eluniversal.com/2011/01/28/en_eco_esp_venezuela-may-review_28A5061653.shtml)

Petrovietnam and PDVSA are developing a joint venture that would produce 200,000 barrels per day (bpd) of heavy crude at Bloc Junín 2 in the Orinoco Belt by 2015. On Friday, Vietnamese media informed the Standard Chartered Bank had arranged to raise financing up to $430 million for Petrovietnam Exploration Production Corp (PVEP) to help it extend its operations in Venezuela. (Veneconomy, 01-28-2011;

http://www.veneconomy.com/site/index.asp?idt=24679&idc=4&ids=44&Var_Send=1&mmD=01&ddD=28&mmH=01&aaD=2011&ddH=31&aaH=2011&Send=Find)

New seizures aim at consolidating State controls over agribusiness

Consolidation of networks of agricultural producers seems to be the government strategy to secure the supply of raw materials for the operation of industries under its umbrella. The latest event is being faced by farmers in South Lake Maracaibo, western Zulia state. Some of them have been recommended to send their milk output to Lácteos Los Andes, a company that was expropriated in 2008. Some farmers answered to the call made by government authorities; some others were exempted due to their commitments to private companies. (El Universal, 01-28-2011; http://english.eluniversal.com/2011/01/28/en_ing_esp_seizures-are-set-to_28A5058133.shtml)

Camiven president projects a bleak future for Venezuela's mining sector

El Mundo Economía y Negocios newspaper has published an interview with Mining Chamber of Venezuela (Camiven) president, Jose Alejandro Rojas, who seems down in the mouth about the mining situation in Venezuela. Painting a doomsday picture, Rojas sustained that the mining sector is being destroyed … "no new mines this year, no projects on the agenda that we are aware of." Any mining project, he stated, usually takes between one to ten years to get through depending of course of its size and the amount of investment involved. In Venezuela's case, it will be a matter of first recovering existing installed capacities that are destroyed before embarking on a project. In the last two years (private) mining companies have contracted 60%. Rojas disclosed that if money isn't invested in maintenance of machinery, then production drops within two to three years. (VHeadline, 01-27-2011;

http://www.vheadline.com/readnews.asp?id=100573)

Politics

Venezuelan and Uruguayan presidents signed 16 bilateral agreements in the areas of agriculture (4), science and technology (5), trade (3), power generation (1) society (2) and nutrition (1). (Veneconomy, 01-28-2011; http://www.veneconomy.com/site/index.asp?idt=24683&idc=1&ids=44&Var_Send=1&mmD=01&ddD=28&mmH=01&aaD=2011&ddH=31&aaH=2011&Send=Find)

Chavez says no plans to takeover Spanish bank unit

Venezuela's President Hugo Chavez said on Saturday he had no plans to nationalize the local unit of Spanish bank BBVA because a senior company official had apologized for his comments during a testy exchange. The socialist leader said the executive, Pedro Rodriguez, had behaved "haughtily" when Chavez phoned him live on television this week and warned him the bank could be taken over if it did not provide more home loans. (Reuters, 01-29-2011;

 http://www.reuters.com/article/2011/01/29/venezuela-bank-idUSN2914205020110129)

Edmee Betancourt takes over as new Trade Minister

Mr. Betancourt was Viceminister of Labor in 2000-2003, Viceminister for Industry at the former Ministry of Trade and Inddustry (2003-2005) and Minister of Trade and Light Industry when it was established in 2005 and until recently President of Venezuela´s Economic and Social Development Bank (BANDES). She is generally considered a moderate technocrat and replaces Ricardo Canaan, who is very hostile toward the private sector. More information in Spanish at:

(Noticias Candela, 01-31-2011; http://noticiascandela.blogspot.com/2011/01/edmee-betancourt-nueva-ministra-de.html)

Venezuela Arms Factory Explosions Leave One Dead, Three Injured

A fire at an arms factory in Venezuela triggered a series of explosions that killed one person and injured three others, Aragua state governor Rafael Isea said in comments carried on state television. Authorities in the city of Maracay began evacuating a 5- square-kilometer (3-square-mile) area around the Compañía Anónima Venezolana de Industrias Militares, or CAVIM, a state- run weapons factory, and restricted traffic on a nearby freeway after the fire began at about 4:45 a.m. local time, the Interior Ministry said in a statement. (Bloomberg, 01-30-2011;

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aD5kkfwras_U)

Primero Justicia lawmaker Julio Borges claims Chávez has given away $69.9 billion to over 40 countries worldwide over the last five years. Only in 2010 the give-aways amounted to $13.4 million and the most recent, a submarine fiber optic cable to improve the Internet in Cuba cost $70 million. (Veneconomy, 01-31-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24699&idc=1)

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.