April 13, 2012

Economics & Finance

Currency Board promises to expedite currency allocations for controlled products

The local Currency Board (CADIVI) has promised to expedite dollar allocations for producing and importing the 19 items controlled by the Cost and Price National Superintendent (SUNDECOP). CADIVI's President

Manuel Barroso met with representatives of companies providing the products. More in Spanish: (El Universal; http://www.eluniversal.com/economia/120413/prometen-facilitar-divisas-para-rubros-controlados)

Exchange controls to continue for political reasons

Aristobulo Isturiz, first Vice President of the National Assembly, says exchange controls are "a political move" and are to continue "until the revolution becomes irreversible. We cannot eliminate exchange controls here because otherwise Chavez would be overthrown". He added controls must remain in place until the strategic goals of the second socialist plan for the nation are achieved. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/control-de-cambio-continuara-como-medida-politica.aspx)

Commodities

Venezuelan government decreed the transfer of exploitation Rights of two oil fields, Bachaquero Tierra and Lagunilla Tierra, in Zulia state, to a joint venture “to be set up between the Venezuelan Oil Corporation (CVP, after its initials in Spanish) and GAZPROMBANK Latin America Ventures". It will be valid for the next 25 years. (Veneconomy, 04-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30096&idc=4; El Universal; http://www.eluniversal.com/economia/120411/two-venezuelan-oil-fields-transferred-to-joint-venture-with-gazprom)

VENALUM shutting down more production cells

The VENALUM aluminum plan has shut down 177 cells in less than two months, while only 336 cells remain connected out of a total 905 which are its total potential. This is only 37.1% of total capacity. Company staff fears that the lack of supplies and operational backlog will lead to the total disincorporation of P-19 cells that account for 1.2 daily tons of aluminum. A long story of disinvestment, neglect by the government and amateur management have led to a huge deficit in available funds, delays in purchasing supplies and labor instability. More in Spanish: (Correo del Orinoco, 04-12-2012; http://www.correodelcaroni.com/index.php?option=com_content&view=article&id=200932:venalum-apago-151-celdas-en-menos-de-dos-meses&catid=75:laboral&Itemid=114; El Universal; http://www.eluniversal.com/economia/120413/siguen-apagando-celdas-de-produccion-en-venalum)

SIDOR improving steel production

Records show 188,000 tons of liquid steel were produced in March, the highest figure in eight months, and 41% above February's production, which was 55,000 tons. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/sidor-levanta-cabeza-en-produccion-de-acero.aspx)

Farmers: Price increase will encourage production

The National Confederation of Agricultural Producers (FEDEAGRO) says that price adjustments on products such as corn, rice, sorghum, soybean and sunflower authorized last week by the Government were positive and that the availability of inputs and the full recognition of costs would contribute to halt declining production. (El Universal, 04-11-2012; http://www.eluniversal.com/economia/120411/farmers-price-increase-will-encourage-sowing-of-cereals; Veneconomy, 04-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30093&idc=3)

International Trade

RUSORO to sue Venezuela at ICSID if there is no "reasonable agreement"

The honeymoon appears to be eroding with the Russians. There is considerable uncertainty about the fate of the assets of the mining company here. According to the president of RUSORO in Venezuela, Andrea Padovani, no agreement has been reached so far on the formation of the joint venture with the Venezuelan Government or on a reasonable amount of compensation for the mining assets that the company has in the country. More in Spanish: (El Mundo, 04-11-2012; http://www.elmundo.com.ve/noticias/petroleo/mineria/rusoro-demandara--a-venezuela-ante-el-ciadi-si-no-.aspx)

Venezuela: Latin America’s most expensive iPhone

Venezuela, not Brazil, can boast of having the most expensive iPhone prices in Latin America, according to a Latin Business Chronicle analysis of prices from Apple and local wireless operators.

The analysis compared prices offered through Apple’s Brazil and Mexico stores with prices offered by operators in Bolivia, Chile, Colombia, Costa Rica Ecuador, Guatemala, Peru, and Venezuela. (Latin Business Chronicle; http://www.latinbusinesschronicle.com/app/article.aspx?id=5609)

Politics

Chavez ahead in presidential race even as he fights cancer, prays for life

With less than six months left until Election Day, President Hugo Chavez has hardly hit the campaign trail. Instead, he has been consumed with his fight against cancer, repeatedly traveling to Cuba for treatment and publicly vowing to defeat his illness. Chavez’s struggle against the disease has become his main rallying cry and could serve as a political asset if his health holds through the October vote. So far, what appears to be a serious life-or-death crisis hasn’t dented his political support. To the contrary, one recent poll showed Chavez with a lead of 14% points over rival Gov. Henrique Capriles. The poll by the firm DATANALISIs had a margin of error of 2.5%. Eduardo Gamarra, a Latin American studies professor at Florida International University in Miami, said compassion elicited by Chavez’s illness “has naturally played to his advantage in the electoral process.” (Washington Post, 04-12-2012; http://www.washingtonpost.com/world/the_americas/hugo-chavez-ahead-in-venezuela-presidential-race-even-as-he-fights-cancer-prays-for-life/2012/04/12/gIQArzT7CT_story.html)

Obama says: "we want free and fair elections in Venezuela"

US President Barack Obama says he want to see "elections that are free and fair and that respect the will of the people", in Venezuela; and added that "as all sovereign nations, it must establish its own destiny, but it is the Venezuelan people who must decide their course democratically". More in Spanish: (El Universal; http://www.eluniversal.com/internacional/120413/barack-obama-queremos-elecciones-libres-y-justas-en-venezuela)

Chavez to attend the Cartagena Summit for less than a day

According to the Summit organization, Chavez will arrive in Cartagena this afternoon to attend the VI Summit of the Americas and will return to Caracas tomorrow morning, a day ahead of the end of the meeting. Uruguay's President José Mujica arrived last night in Caracas to meet with President Chavez and may continue on to Cartagena with him. More in Spanish: (El Universal, 04-13-2012; http://www.eluniversal.com/internacional/120413/chavez-va-por-menos-de-un-dia-a-la-reunion-de-cartagena; AVN; http://www.avn.info.ve/contenido/presidente-mujica-llegó-venezuela-para-reunirse-hugo-chávez)

Guyana asks UN to disregard Venezuelan objections on maritime platform

A delegation headed by Guyanese Foreign Minister Carolyn Rodrigues-Birkett travelled to the United Nations to present their case for an extension of the nation's maritime platform for an additional 150 miles. During her presentation the Foreign Minister requested that Venezuela's objections should be disregarded. More in Spanish: (El Universal, 04-13-2012; http://www.eluniversal.com/nacional-y-politica/120413/guyana-niega-en-la-onu-disputa-con-venezuela)

Venezuela kidnapping rate triples Mexico's in 2011

The rate of reported kidnappings in Venezuela was three times that of Mexico in 2011. There were 1150 incidents, which is 3.8 kidnappings per 100,000 people. Mexico reports a rate of 1.1 and neighboring Colombia's rate is 0.7 per 100,000. Only fractions of kidnapping cases are reported. More in Spanish:  (El Universal, 04-13-2012; http://www.eluniversal.com/sucesos/120413/tasa-de-secuestros-en-venezuela-triplico-la-de-mexico-en-2011)





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.

April 10, 2012

Economics & Finance

Government may grab workers' social benefits

In a radical change to Venezuela's labor law, President Hugo Chávez announced that, under the amended labor law, funds for social benefits for all workers, both public and private, shall be deposited in a fund managed by the government. According to Chavez: "There is a proposal in the labor bill to create a state-run Fund for Management of Workers' Social Benefits, in which the money of the social benefits of all workers, both public and private, will be deposited. The operations of this fund would be governed by a special law". (El Universal, 04-09-2012; http://www.eluniversal.com/economia/120409/government-fund-to-manage-workers-social-benefits)

State run agribusiness unsuccessful Venezuela

Expropriations and seizures by the government have not necessarily resulted in increased productivity. The agribusiness infrastructure established by the government did not yield the expected results in 2011. The annual reports and accounts of the ministries of Agriculture and Land and Food clearly show the inability to implement projects and improve productivity because of financial constraints. (El Universal, 04-09-2012; http://www.eluniversal.com/economia/120409/unsuccessful-state-run-agro-industrial-policy-in-venezuela)

Inflation eats up most of the minimum wage increase, and may increase

Minimum wage workers will be paid 15% more from May 1 and they will get a second 15% hike in September. While this adjustment seems to be high, much of the increase is devoured by Venezuela's huge inflation rate. After deducting price increases, the purchasing power of workers will not grow significantly. According to Henkel García, of the ECONOMÉTRICA research firm, if local inflation stays at 26% this year, purchasing power will be only 4.8% higher in September than in September 2011. FEDECAMARAS President Jorge Botti points out that the decreed salary increases will further impact inflation and carry it to 30% (El Universal, 04-09-2012; http://www.eluniversal.com/economia/120409/inflation-erodes-much-of-minimum-wage-increase and more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html)

More bonds may be issued to inject money into Sitme

According to ECONANALÍTICA analyst Asdrubal Oliveros, the government will soon issue more debt in order pay for imports and battle food shortages during the election year, while keeping inflation under 22% - a policy which Oliveros terms "crazy". More in Spanish: (Tal Cual, 04-09-2012; http://www.talcualdigital.com/index.html)

Bank of the South to be launched with U$D 7 billion

Eudomar Tovar, first Vice-President of the Central Bank of Venezuela, says Latin America is heading toward a new financial architecture that will boost trade integration based on complementarity instead of competition. "Complementarity seeks to strengthen the industrial network of every Latin American country. We must take into account that there is no way to promote integration process only through tariff reduction," he explained. (El Universal, 04-07-2012; http://www.eluniversal.com/economia/120407/bank-of-the-south-to-operate-with-usd-7-billion-at-the-outset)

Commodities

Global environment is suitable for oil investment

Alejandro Grisanti, an economist with Barclays Capital is positive that Venezuela's geopolitical situation is its main asset. "Venezuela, because of her geopolitical situation, is at an exceptional point in time, the best possible time to enhance and pursue further investment in the oil sector", despite the fact that  the oil industry operates at more than 13% below the numbers recorded one decade ago, the failure to materialize expansion plans and continued operational troubles. (El Universal, 04-07-2012; http://www.eluniversal.com/economia/120407/global-environment-is-suitable-for-oil-investment)

PDVSA implements oil spill contingency plan in Catatumbo River

State-run oil company Petróleos de Venezuela reports that it is monitoring events related to a ruptured oil pipeline as a result of an alleged explosive attack. The spill was detected on Saturday, April 7 by Empresa Colombiana de Petróleos (ECOPETROL). PDVSA said in a statement that the oil spill occurred in an area of Catatumbo River, in Colombian territory, at about 11:30 a.m. on Saturday in an area known as Filogrogingo, in Norte de Santander Department. (El Universal, 04-09-2012; http://www.eluniversal.com/economia/120409/pdvsa-implements-oil-spill-contingency-plan-in-catatumbo-river)

Flour now appears scarce

A survey carried out by a team from the ULTIMAS NOTICIAS daily newspaper shows that precooked corn flour is now scarce at six outlets visited in Caracas. Precooked corn flour is the basis for preparing the traditional Venezuelan "arepa". More in Spanish: (Últimas Noticias, 04-09-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/harina-se-suma-al-combo-de-los-problematicos.aspx)

International Trade

Imports from Colombia rose 51.9% in a year

Venezuelan imports from Colombia rose 51.9% between February 2011 and March of this year, according to latest figures released by Colombia´s National Bureau of Statistics (DANE). Venezuela bought goods for U$D 160.45 million at the end of February this year, compared with U$D 105.61 million for the same month of 2011, which is an increase of 51.9%. Over the first two months of the year the country has accumulated purchases of U$D 296.7 million from Colombia, an increase of 62.7% over the $ 182.34 million for the same period of 2011. More in Spanish: (El Mundo, 04-10-2012, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/importaciones-desde-colombia-subieron-51,9--en-un.aspx)

Politics

Sobbing Chavez returns to Cuba for more treatment

President Hugo Chavez has returned to Cuba for a third round of radiotherapy to treat a recurrence of his cancer. The President told Venezuelans he was returning to Cuba for more treatment after an emotional plea for his life at an Easter mass. Speaking through tears he asked Jesus to "Give me your crown, Christ, give it to me, I will bleed, give me your cross, a hundred crosses, but give me life, because I still have things left to do for the (Venezuelan) people and for the homeland," he said during Thursday night's mass. The exact nature of President Chavez's cancer has not been disclosed, fuelling rumors that his health may be worse than officially stated. Just hours before leaving for Havana, the Venezuelan leader unveiled a 32.25% increase in the minimum wage, to be introduced in two stages later this year. (BBC News, 04-08-2012; http://www.bbc.co.uk/news/world-latin-america-17647921)

Chavez exit won’t mean Venezuela’s problems out the door

This week’s Summit of the Americas, which opens on Saturday in Cartagena, Colombia, may well be President Hugo Chavez’s last. Right now, though, there’s no guarantee that whoever, or whatever, succeeds Chavez will necessarily bring a change for the better. Chavez, who faces elections in October, has just left Venezuela for another round of radiation therapy in Cuba to treat a mystery cancer first disclosed last June. It’s uncertain if he will be healthy enough to campaign, or how long he will live if he is re-elected. (Bloomberg, 04-09-2012; http://www.bloomberg.com/news/2012-04-09/chavez-exit-won-t-mean-venezuela-s-problems-out-the-door.html)

Venezuela termed "high risk" by FITCH

The next few years will be difficult for Venezuela's economy despite speculation about the health of President Chavez and a surge by presidential candidate Henrique Capriles Radonski. In a recent memo, FITCH Ratings Agency again called Venezuela a "risky country" for investors due to severe macro-economic distortions arising from the current exchange controls, the highest inflation in Latin America and increasing indebtedness. More in Spanish: (Tal Cual; http://www.talcualdigital.com/index.html)

Kidnapped foreign diplomat freed in Venezuela

A Costa Rican diplomat kidnapped in Venezuela has been freed, Venezuela's minister for justice and the interior said Tuesday. The diplomat, Guillermo Cholele, was reported kidnapped Sunday night. "Through investigative work and political pressure, we have achieved the liberation of the Costa Rican diplomat," Minister Tareck El Aissami said on his Twitter account. Cholele is in good physical shape and health, and was under police protection on his way to be reunited with his family, he said. According to a police report, Cholele did have a small wound on his head where he had apparently been hit. (CNN, 04-10-2012; http://edition.cnn.com/2012/04/10/world/americas/venezuela-diplomat-kidnapped/index.html?iref=allsearch; El Universal, 04-09-2012; http://www.eluniversal.com/nacional-y-politica/120410/costa-rican-commercial-attache-freed-in-caracas-following-kidnapping)

Eleven diplomats have been attacked since 2010 in Venezuela

At least 11 diplomats have been attacked by criminals between 2010 and 2012 in Venezuela, according to unofficial records kept by Venezuelan daily newspaper El Universal. (El Universal, 04-09-2012; http://www.eluniversal.com/nacional-y-politica/120409/eleven-diplomats-have-been-attacked-since-2010-in-venezuela)




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.

April 06, 2012

Economics & Finance

Fitch revises Venezuela outlook to negative

Fitch Ratings revised down its sovereign credit outlook for Venezuela to negative on Wednesday, citing a weakening fiscal policy framework. Fitch said the South American country's economy is becoming more vulnerable to commodity price shocks. It affirmed the nation's B-plus rating. Venezuela is rated B-plus with a stable outlook by Standard & Poor's and B2, a notch lower but also stable, by Moody's Investors Service. Venezuela's benchmark 2027 Global bond, already slightly weaker on the day, saw its bid level drop to 87.563, down 0.562 points in price, yielding 10.934 percent. (Reuters, 04-04-2012; http://www.reuters.com/article/2012/04/04/venezuela-fitch-outlook-idUSL2E8F433K20120404;  http://www.reuters.com/article/2012/04/04/idUSL2E8F42S220120404;  Bloomberg, http://www.bloomberg.com/news/2012-04-04/venezuela-s-credit-rating-outlook-cut-to-negative-by-fitch.html)

Analyst: Too soon to say that inflation is diving

According to the Central Bank of Venezuela, the Consumer Price Index (CPI) decreased for the fourth month in a row. However, economist José Guerra, ex manager of economic research at the BCV, feels "it is too early to claim victory." Guerra pointed out that since 2005, prices have shown an upward trend. Therefore, he thinks that results obtained in the past four months can’t be used as an indicator to set a trend. "I am not sure that one can speak of a downward trend. I think it would be wise to wait some months," Guerra said. (El Universal, 04-04-2012; http://www.eluniversal.com/economia/120404/analyst-too-soon-to-say-that-inflation-is-diving)

Bank of the South constitutive agreement came into effect

The Constitutive agreement of the Bank of the South came into effect last Tuesday, as it has been ratified by five of its seven founding members, according to a statement by the Venezuelan Foreign Ministry. The founding of the Bank of the South was endorsed in December 9th, 2007 by Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela, with the aim to devise a regional funding agency independent from organizations such as the International Monetary Fund (IMF). (AVN, 04-04-2012; http://www.avn.info.ve/contenido/bank-south-constitutive-agreement-came-effect)

Commodities

Crude oil output at the Orinoco Oil Belt over 1.6 million

According to Minister of Energy and Mines Rafael Ramírez, "We are currently at a record production level of 1.21 million barrels a day. Everything indicates that our set goal is feasible, like the U$D 5 billion in additional resources that we have to raise production at the Belt". (El Universal, 04-05-2012; http://www.eluniversal.com/economia/120405/crude-oil-output-at-the-orinoco-oil-belt-over-16-million)

Fitch revises PDVSA's rating outlook to negative

Fitch Ratings has affirmed Petróleos de Venezuela S.A.'s (PDVSA) 'B+' Foreign and Local currency Issuer Default Ratings (IDRs) and its 'AAA (ven)' National scale rating. This rating action affects approximately U$D19.5 billion of debt outstanding with a Recovery Rating of 'RR4'. Fitch has also affirmed C.A. La Electricidad de Caracas's (EDC) Foreign and Local currency (IDRs) at 'B+' as well as its National scale long- and short-term ratings of 'AAA (ven)' and 'F-1+ (ven)', respectively. (Reuters, 04-04-2012;

http://www.reuters.com/article/2012/04/04/idUSWNA429520120404)

Gazprom Neft to begin Venezuela output later than Deputy PM date

OAO Gazprom Neft (SIBN) will begin output at a joint venture with Petróleos de Venezuela SA in in August, three months later than a target set by the Russian Deputy Prime Minister Igor Sechin last October. “We have gained all permits and begun drilling,” said Alexander Dyukov, chief executive officer of the oil arm of Russia’s natural-gas export monopoly, on state-run Rossiya 24 television today. “In August we will produce first oil and in the summer of 2013 reach 50,000 barrels a day.” By 2018 production should reach a daily 450,000 barrels, he said. (Bloomberg, 04-04-2012; http://www.bloomberg.com/news/2012-04-04/gazprom-neft-to-begin-venezuela-output-later-than-deputy-pm-date.html)

Harvest may eye Chinese buyer for PETRODELTA stake, analyst says

Harvest Natural Resources Inc. (HNR), a U.S. oil company with producing assets in Venezuela, may find a Chinese buyer for its stake in the Petrodelta venture, according to Little Bear Research. The “likely acquiror” for Harvest’s 32% stake in PETRODELTA may be China National Offshore Oil Corp or China Petroleum & Chemical Corp, Zachary Prensky, an analyst with Little Bear Research in New York, wrote in a note to clients today. Petróleos de Venezuela SA, the state-owned oil company, has a 60% stake PETRODELTA, located in eastern Venezuela. (Bloomberg, 04-04-2012; http://www.bloomberg.com/news/2012-04-04/harvest-may-eye-chinese-buyer-for-petrodelta-stake-analyst-says.html)

Politics

Positive results mark President Chavez's recovery

Upon returning to Venezuela on Wednesday night, President Hugo Chavez underscored that positive results have marked his physical recovery and he informed that a second radiotherapy session concluded successfully. "Today (Wednesday) I finished a second radiotherapy session. So far, fortunately, there has not been any adverse reaction to the treatment. The body has assimilated it well and all tests I've gone through have showed positive results of physical recovery," Chavez said. (AVN, 04-05-2012; http://www.avn.info.ve/contenido/positive-results-mark-president-chavez039s-recovery; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-vice-president-says-hugo-chavezs-2nd-radiation-treatment-was-successful/2012/04/04/gIQABBTcvS_story.html; CNN, http://news.blogs.cnn.com/2012/04/05/chavez-returns-to-venezuela-after-radiation-treatment/?iref=allsearch)

Lula shows Chávez interest in visiting Brazil soon

Former Brazilian president Luiz Inácio Lula Da Silva promised his President Chavez that as soon as his doctors deem it appropriate he would visit Caracas in order to have a meeting with him. The news was provided in a communiqué from the Ministry of Foreign Affairs which said Lula made a phone call to his friend Chávez on Tuesday. (El Universal, 04-05-2012; http://www.eluniversal.com/nacional-y-politica/120405/chavez-shows-lula-his-interest-in-visiting-brazil-soon)

April 03, 2012

Economics & Finance

Foreign corporate non repatriated dividends estimated at U$D 12.3 billion

For three years many foreign companies have not been authorized by the Foreign Exchange Administration Commission to repatriate dividends or profits. At the end of 2007, multinationals were authorized to repatriate U$D 5 billion, but in 2008 were able to repatriate under U$D 2 billion. In 2010 the Currency Board authorized only U$D 100 million for repatriations and by the end of 2011 it had only authorized U$D 200 million for dividends and profits. According to estimates by the economic research firm ECOANALÍTICA, total accumulated dividends pending repatriation currently amount to U$D 12.3 billion. (El Universal, 04-02-2012; http://www.eluniversal.com/economia/120402/companies-weigh-options-to-repatriate-dividends)

Currency outflows estimated at U$D 131.5 billion under Chavez

Based on balance of payments information published by the Central Bank of Venezuela, economist Miguel Angel Santos, believes that throughout the tenure of Hugo Chavez (1999-2011) the outflow of currency, after time-based adjustments, adds up to U$D 131.54 billion. (El Universal, 03-31-2012; http://www.eluniversal.com/economia/120331/outflowing-currency-reaches-usd-1315-billion)

March inflation 0.9 pct, could end 2012 at 20%

Consumer prices rose 0.9% in March, the lowest monthly rate in the last four years, according to President Hugo Chavez. Venezuela had the highest inflation in the Americas last year at 27.6%, and economists had expected it to be even higher in 2012 due to a pre-election spending bonanza by Chavez's government. Economist Jose Gregorio Piña forecasts that inflation in Venezuela could end under 20%, if the trend registered in the last nine months is sustained; but financial consultant Henkel García says the new controlled prices will repress inflation for only a few months. Garcia explained inflation will increase before six months are up as public expenditure will also increase. (Reuters, 03-31-2012; http://www.reuters.com/article/2012/03/31/venezuela-inflation-idUSL2E8EV0ZG20120331; AVN, 04-02-2012; http://www.avn.info.ve/contenido/inflation-venezuela-could-end-under-20-year; Veneconomy; http://www.veneconomy.com/site/index.asp?ids=44&idt=30011&idc=3)

New laws pave the way for more debt

In 2000 the government passed the Law on Financial Administration of the Public Sector to organize fiscal accounts, but since 2009, this law - as well as other legal instruments - has been amended to allow more debt financing and to use non recurring income with no limits. Now the President has been given the green light to request additional debt and use other financial schemes to conduct public loan operations and ask for more credits. (El Universal, 04-02-2012; http://www.eluniversal.com/economia/120402/laws-pave-the-way-for-more-debt)

Commodities

Official 2011 reports reveal huge losses in Guayana region state-owned industries

Consolidated operating losses at aluminum iron, steel and gold state-owned companies in the Guayana region total VEB 7 billion, according to official figures presented by the Chavez Government to the National Assembly. The astounding figure adds on to those revealed last week, which show that over the past three years those companies did not produce or sell almost U$D 20 billion, as a whole. More in Spanish: (Tal Cual, 04-03-2012; http://www.talcualdigital.com/index.html)

PETROCEDEÑO accident under control

According to a statement released by state-run oil holding Petróleos de Venezuela (PDVSA), the situation caused by an accident at the joint venture PETROCEDEÑO in the state of Anzoátegui is now under complete control. "The event occurred this Sunday at area 9 of the joint venture Petrocedeño is now completely under control thanks to the oil industry's Safety and Emergency Management team," stated Pdvsa's communiqué. (El Universal, 04-02-2012; http://www.eluniversal.com/economia/120402/petrocedeno-operational-event-under-control; Fox Business, http://www.foxbusiness.com/news/2012/04/01/explosion-at-venezuelas-petrocedeno-upgrader-kills-worker/)

Tocoma turbines to make first spins in September

The first turbines set up in the Manuel Piar-Tocoma hydro-electric plant, located in Bolívar state, should make their first test spins in early September, said Electric Energy Minister Hector Navarro. Once it is operational, Tocoma is to generate power equivalent to that produced by the Caruachi plant, some 17,000 megawatts. (Veneconomy, 03-30-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29996&idc=3)

International Trade

State enterprises report delays in ports

Delays and difficulties in Venezuelan ports are not a problem just for private companies. The 2011 Annual Report by the Ministries of Trade, Science and Technology and Industries show that state owned companies also faced important hurdles in importing goods. The nationalized telephone company CANTV reports "slow arrival of equipment and materials is due to delays in import procedures and transfers in storage". More in Spanish: (El Universal, 04-03-2012; http://www.eluniversal.com/economia/120403/empresas-estatales-reportan-trabas-en-puertos-nacionales)

Argentina-Venezuela trade expected to reach U$D $2.800 billion this year

Argentine Ambassador Carlos Alberto Cheppi says trade with Venezuela is expected to grow to U$D 2.8 billion this year, and added that in 2004 total trade was U$D 100 million. The goal of Presidents Cristina Fernandez and Hugo Chavez, of Argentina and Venezuela, is to end 2012 with trade at U$D 3 billion. More in Spanish: (AVN, 04-03-2012; http://www.avn.info.ve/contenido/esperan-que-intercambio-comercial-argentina-venezuela-llegue-2800-millones-este-año)

Trading with Venezuela grows Nicaragua exports

The United States continued to be Nicaragua´s main trading partner, with a total U$D 2155 million, followed by Venezuela with U$D 88.7 million, according to the Nicaraguan Export Center. More in Spanish: (El Nacional04-03-2012; http://www.el-nacional.com/)

Politics

Chavez leaves Venezuela for more radiation therapy in Cuba

President Hugo Chavez left Venezuela today to continue radiation therapy in Cuba as part of treatment for an undisclosed type of cancer, six months before seeking re-election. Chavez, who spoke earlier in a nationwide broadcast from the presidential palace in Caracas, said that this will be the second of five radiation sessions in an attempt to prevent cancerous tumors from returning. He returned to Caracas from his first session in Cuba on March 29. (Bloomberg, 03-31-2012; http://www.bloomberg.com/news/2012-03-31/chavez-to-return-to-cuba-today-to-continue-radiation-therapy-1-.html; El Universal, 04-02-2012; http://www.eluniversal.com/nacional-y-politica/120402/chavez-back-to-cuba; Latin American Herald Tribune, 04-01-2012; http://www.laht.com/article.asp?ArticleId=486403&CategoryId=10717; The Washington Post, http://www.washingtonpost.com/world/the_americas/venzuealan-president-chavez-returning-to-cuba-for-cancer-treatment/2012/03/31/gIQAt7VdnS_story.html)

WIKILEAKS: Cuban intelligence sustains Chavez regime

According to WIKILEAKS reports quoted in Miami's "Nuevo Herald", Cuban spies with direct access to President Hugo Chavez have a key role in sustaining his regime by providing constant reports on opposition movements, rumors in barracks and any sign of potential betrayal in revolutionary ranks. The reports - which include State Department cables and analysis by private intelligence firm STRATFOR, show Chavez' high dependence on Cuban intelligence services. More in Spanish: (El Universal, 04-03-2012; http://www.eluniversal.com/nacional-y-politica/120403/wikileaks-espias-cubanos-sostienen-el-regimen-de-chavez)

March 30, 2012

Economics & Finance

By degree, Chavez grants himself unlimited powers to spend and increase debt

Through a decree based on the Enabling Act, President Chavez has reformed the Basic Law on Public Sector Financial Management in order empower the President to create debts above and beyond limits set by the Annual Credit Law. The reform says additional debt can be created in "unforeseen circumstances, not planned or difficult to project", and the amount of these transactions will be added into the debt cap for the next fiscal year. It also authorizes the President to directly approve spending. Article 81 of the new decree says: "It will not be necessary to have authorization from the National Assembly nor take into account the opinion of the Central Bank". More in Spanish: (El Nacional, 03-30-2012; http://www.el-nacional.com/; El Universal; http://www.eluniversal.com/economia/120330/gobierno-puede-emitir-deuda-sin-opinion-previa-de-an-y-bcv)

Expert cites Venezuela as an example of misuse of oil revenue

Venezuela and Argentina are not implementing sound oil policies, cautioned Zimbabwean oil and gas expert Duncan Clarke. Speaking to Efe in Nairobi, where he presented his new book "Africa's future," Clarke said that "Venezuela, and particularly (President Hugo) Chávez is an example of misuse of the cash generated by oil and gas." The expert knows the energy situation in Latin America, where he has been an adviser to governments and companies. He is the chairman of Global Pacific & Partners, a natural resources consultancy group. (El Universal, 03-28-2012; http://www.eluniversal.com/economia/120328/expert-puts-venezuela-as-an-example-of-misuse-of-oil-revenue)

BARCLAY's says dollar denominated bond issues to increase to U$D 12 billion in 2012

A report by BARCLAYS Capital on Venezuelan government bonds says dollar denominated bond issues will increase over the next few months and projects operations for 2012 at U$D 12 billion. It reports that at least U$D 5 billion  will go to the SITME operation managed by the Central Bank in order to allocate foreign currency to the private sector in order to increase supplies and curb inflation. More in Spanish: (El Universal, 03-29-2012; http://www.eluniversal.com/economia/120329/estiman-que-se-aceleraran-colocaciones-de-bonos-en-dolares)

Statistics are in chaos in Venezuela, according to a report by TAL CUAL Daily, which reports on the substantial differences between figures supplied by international organizations and those provided by official agencies in Venezuela. More in Spanish: (Tal Cual, 03-30-2012; http://www.talcualdigital.com/index.html)

Commodities

Colombia's ECOPETROL to drill for oil In Venezuela

Colombia's largest company, state-controlled energy firm ECOPETROL SA, plans to drill for crude oil in neighboring Venezuela as the two countries continue to improve once-strained relations. Colombian Energy Minister Mauricio Cardenas announced the plans Wednesday after a meeting with his Venezuelan counterpart, Rafael Ramirez, in the coastal resort city of Cartagena. Cardenas said ECOPETROL will work alongside Venezuela's national oil company, Petróleos de Venezuela SA, or PDVSA, to revitalize already-developed oil fields in western Venezuela's oil-rich Lake Maracaibo. The joint venture is expected to produce somewhere between 40,000 and 100,000 barrels a day of crude oil. (Fox Business, 03-28-2012; http://www.foxbusiness.com/news/2012/03/28/colombias-ecopetrol-to-drill-for-oil-in-venezuela/#ixzz1qc02tjt0; Bloomberg, 03-28-2012; http://www.bloomberg.com/news/2012-03-28/colombia-venezuela-to-study-ecopetrol-ventures-pipeline.html)

PDVSA is ending NYNAS partnership

Venezuela is selling its stake in a refinery project with Finland's Neste Oil that operates facilities in Sweden and Britain, according to Energy Minister Rafael Ramírez in comments published on Friday. Venezuela's state oil company PDVSA and Neste Oil are 50-50 partners in Nynas AB, which runs four refineries with a combined capacity of 67,000 barrels per day. The planned sale will leave PDVSA without any downstream refinery assets in Europe. (Diplodemocracia, 03-20-2012; http://diplodemocracia.blogspot.com/2012/03/pdvsa-is-ending-nynas-partnership-pdvsa.html)

SIDOR in the red U$D 358 million during 2011

State-run steelmaker Siderúrgica del Orinoco (Sidor) reported U$D 358 million losses in 2011, despite rising production and sales. In 2010, the steel mill had reported profits amounting to U$D 57 million. Venezuela's main steelmaker reported a positive operating income (gross sales and net sales of goods) amounting to VEB 6.43 billion (U$D 1.49 billion), while the cost of sales of goods and services was U$D 1.57 billion translated into a negative balance of U$D 80 million. (El Universal, 03-28-2012; http://www.eluniversal.com/economia/120327/sidors-losses-at-usd-358-million-in-2011)

SMURFIT land takeover endangers supply of packaging for foodstuff

With 42% of SMURFIT owned land taken over by the government, company workers fear lumber supply from 7,000 plus hectares - which produce around 200,000 tons of wood - could severely hit the manufacture of packing materials. SMURFIT says around 53% of its production goes to the food industry, all of which could lead to a deficit in agribusiness. More in Spanish: (El Mundo; 03-13-2012; http://www.elmundo.com.ve/noticias/economia/empresas/toma-de-fincas--de-smurfit-pone-en-riesgo-empaques.aspx)

Politics

Chavez back after radiation therapy, facing elections on October 7th

President Hugo Chavez returned home to Venezuela on Thursday after a first session of radiation treatment in Cuba that he hopes will cure his cancer and allows him to win a new six-year term in October. Very little is known about Chavez's condition - he has had three cancer operations in less than a year - so doubts remain about the future of the man who has dominated politics in South America's biggest oil exporter for the last 13 years. He said he expected to return to Cuba on Saturday to resume the radiation treatment, and to stay there for four more days.  Separately on Thursday, Venezuela's national electoral authority confirmed October 7 as the election date - squashing rumors that the poll might be brought forward, or delayed, due to Chavez's cancer treatment. (Reuters, 03-29-2012; http://www.reuters.com/article/2012/03/29/us-venezuela-chavez-idUSBRE82S15220120329; The Washington Post, 03-29-2012; http://www.washingtonpost.com/world/the_americas/hugo-chavez-back-in-venezuela-after-1st-round-of-radiation-therapy-in-cuba-for-cancer/2012/03/29/gIQA9wP3hS_story.html; AVN, 03-29-2012; http://www.avn.info.ve/node/105693)

Chavez threatens banks, private business for supporting his opponents

President Hugo Chávez says he has information on alleged opposition plans to destabilize the country and threatened some banks and private companies with nationalization if they support his opponents. He said he is drawing up a list of actions to take in case the opposition takes it upon itself to "attach the people". More in Spanish: (El Nacional, 03-30-2012; http://www.el-nacional.com/)

Latin America Security: Venezuela Worse, Panama Safer

Venezuela, along with Haiti and three Central American countries, is getting more dangerous for foreign multinational executives, according to the sixth annual Latin Security Index developed by FTI Consulting Ibero America for Latin Business Chronicle. Meanwhile, Panama has seen an improvement. Overall, security for multinational executives in Latin America has worsened slightly the past year, the index shows. The Latin Security Index takes into account how each country in the region is doing related to public insecurity, with a special focus on the business community. (Latin Business Chronicle, 03-28-2012; http://www.latinbusinesschronicle.com/app/article.aspx?id=5580)

Caracas: “A War Zone”

In Venezuela these days, no one is safe, especially local and foreign business people. “Caracas is the most dangerous capital city in the world, more dangerous than Baghdad,” says Roberto Briceño Leon, who heads the Observatorio Venezolano de Violencia, a non-government watchdog that monitors crime in the country. (Latin Business Chronicle, 03-28-2012; http://www.latinbusinesschronicle.com/app/article.aspx?id=5581)

Chavez objects to US government statement to travelers about crime in Venezuela

President Hugo Chavez is taking issue with the U.S. State Department for posting a statement advising travelers to beware of rampant violent crime in his country. Chavez said that the South American country’s security situation ought to be compared to that of the United States. “Where would there be greater lack of public security on the streets? In Venezuela or in the United States?” Chavez said. “Let’s look at the figures.” (The Washington Post, 03-27-2012; http://www.washingtonpost.com/world/the_americas/hugo-chavez-objects-to-us-government-statement-to-travelers-about-crime-in-venezuela/2012/03/27/gIQAM8h0eS_story.html)

Chávez, 44%; Capriles Radonsky, 31%

President Hugo Chávez has a 13-pecentage point lead over his challenger Henrique Capriles Radonski, the candidate of Venezuelan opposition umbrella group Unified Democratic Panel (MUD), according to the latest opinion poll released by polling firm DATANÁLISIS. As per the poll conducted in March, 44% of voters favor Chávez compared to 31% for Capriles, amid a war of figures that broke out in the media following opposition primary election held in February. According to DATANALISIS Director Luis Vicente León, although Chavez's cancer impacts his image and creates uncertainty among his supporters, it also overshadowed the "political impact of opposition primaries". (El Universal, 03-27-2012; http://www.eluniversal.com/nacional-y-politica/120327/chavez-44-capriles-radonsky-31 and more in Spanish: El Universal, 03-30-2012; http://www.eluniversal.com/nacional-y-politica/120330/misiones-y-cancer-de-chavez-afectaron-intencion-de-voto)