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Caracas, Saturday May 21 , 2005  
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Pdvsa still in the eye of the storm

*State-run oil company Petróleos de Venezuela (Pdvsa) is facing gradual dismantling, which has led to a decline in output and productivity rates compared to past performance, Monday, May 16 said oil expert José Toro Hardy.
*Toro Hardy remembered that when firing more than 18,000 oil workers in 2003, Pdvsa managers discarded more than 300,000 years of experience and knowledge that are currently required in the country's major industry.
*Such a move was a retaliation following a two-month strike by oil workers. Now, it is normal that Pdvsa "goes through such a serious crisis," he said.

*He added that Pdvsa oil output has dropped by some 700,000 bpd.

*The Comptrollership is entitled to monitor state oil company Petróleos de Venezuela (Pdvsa), but "due to a longstanding culture, it was thought that the company was beyond the public control," Venezuelan Comptroller General Clodosvaldo Russián said.
*"Pdvsa belongs to all Venezuelans and is subject to the fiscal control of the Venezuelan Comptroller General."
*The senior official stressed that as soon as he took over, he worked on the assessment of the oil business. "There was an office of the Venezuelan Comptroller General at Pdvsa, but it was taken to the Comptrollership headquarters as monitoring could be conducted without the need of being there," he explained.
*Russián met with Vice-President José Vicente Rangel in order to discuss the final stage of the Law on the Comptroller General Office and the National Tax System Control.

*According to Russian, once reviewed, the instrument could be ready for endorsement in four-week time.

*A report submitted to the National Assembly (AN) Comptrollership Committee by former attorneys of the western division of state oil company Petróleos de Venezuela (Pdvsa) shows that the holding is far from unburden the judicial, administrative and tax caseload following the 2003 strike.
*According to the report covering December 2004 to February 2005 and delivered last March by ex coordinator of Legal Affairs Juan Carlos Delgado, at the end of February Pdvsa Western Division faced 7,748 judicial, administrative and tax proceedings, 6,762 of which involve trials related to 20,000 employees who were fired during the 2002-2003 nationwide strike.
*As of February, there were 122 trials pending at Labor Inspector's Offices, Judicial Circuit, western Zulia state, 294 regular trials and 270 criminal proceedings before Zulia Criminal Judicial Circuit and at the local Attorney General Office.
*Delgado noted that out of the total number of trials for dismissal status that has been heard, only 447, or 6.6 percent, favored Pdvsa, in addition to 96 ordinary trials acquired and 48 criminal proceedings.
*It was known that at the present time over 90 complaints have been filed against Pdvsa nationwide. Even a public prosecutor has been appointed to discover evidence of alleged wrongdoing in Citgo, a Pdvsa subsidiary based in the United States, following an investigation conducted by a AN Comptrollership Subcommittee headed by government deputy Jesús García Rojas (MVR).
*Most of the trials pending at Pdvsa Western division -3,792- come from senior staff.

*The instruction given by President Hugo Chávez to the parties to operational agreements for payment in bolivars was the cherry that decorates a cake with explosive ingredients -income tax increase from 35 to 50 percent, review of tax statements for the last four fiscal years, sale of revenues to the Venezuelan Central Bank and compulsory migration to joint venture with a major sharing of state oil company Petróleos de Venezuela (Pdvsa) within six months.
*This is the status for most multinationals that work under the 32 agreements executed by Pdvsa during the 1990's to lift oil output in marginal fields.
*According to legal counsels, all of these steps render operational agreements unprofitable as most investment was made in foreign currency, and profits were calculated accordingly. The agreements entered into with Pdvsa establish clearly that the operational costs, principal and investment, should be repaid in US dollars.
*This is the only allegation that may be used by operating companies to protect themselves. According to President Chávez' instructions to Pdvsa, from now on, the holding should pay the companies in local currency. So far, the amount pending accounts for USD 3 billion a year, based on official figures.
*The companies claim a stake in the agreements executed after the bidding and prepared by Pdvsa without the direct involvement of multinationals.
*In addition to mismatch between the US dollars that Pdvsa should deliver to the Venezuelan Central Bank (BCV) and the currency actually received, payment in local currency for operational agreements would increase the flow that should be declared by the holding to BCV.

*National Assembly (AN) president Nicolás Maduro Tuesday ensured the lawmaking body will not allow Rafael Ramírez, Energy and Petroleum Minister and president of state-owned oil company Petróleos de Venezuela (Pdvsa), to be exposed to any mass media show.
*His statements came at a meeting of the AN taskforce debating a vote of no confidence opposition parliamentarians have requested against Ramírez, news agency ABN reported.
*Maduro added that Ramírez' appearance before the Venezuelan Parliament, which was originally set to take place in May, was deferred. He will appear "at the right and suitable time for the country," AN president said.

*Ramírez was scheduled to appear in parliament on Tuesday to provide a rationale for Pdvsa performance, oil operational agreements and a number of corruption claims within the oil conglomerate, Maduro announced on May 11.

*Domestic energy policy is aimed at preserving resources sovereignty, or control over foreign sharing and ensured payment of royalties to the state, Ministry of Energy and Petroleum Rafael Ramírez said Wednesday, May 18.
*According to Ramírez, since the nationalization of the oil industry, there has been constant confrontation with multinationals that try to control all energy resources.
*The government intends to defend non-renewable natural resources by keeping fair prices in the global market. Until the oil strike (in 2002-2003), senior managers of state oil company Petróleos de Venezuela (Pdvsa) had been "captured by foreign interests."

*In his view, foreign control included reforms to oil-related rules and regulations and oil opening.

*State oil company Petróleos de Venezuela (Pdvsa) has delivered, in five-month term, 50 percent of the amount budgeted for 2005.
*Based on treasury estimates, the oil business has delivered USD 6 billion on account of royalties, income tax and dividends.
*This year quota included oil income for USD 12.1 billion, income tax for USD 4.4 billion, and dividends for USD 1.3 billion. According to official sources, the company sped up the delivery of the monies, and in five-month term half of expected taxes was paid already. By the last quarter of 2005, additional income is expected.
*Revenues have been favored by a hike in the Venezuelan oil basket, USD 40/b in average, or USD 17 over a budgeted price of USD 23/b.
*Due to early oil contributions and growing tax collection, contribution by means of taxes exceeds USD 5.5 billion, almost half of the 2005 budget accounting for USD 11.6 billion.
*Such increase sparked public expenditure set at USD 32.3 billion this year. Based on the treasury data, as of the first quarter, 30 percent of the budget had been implemented.
*Major items include personnel expenses and the Special Social Program for missions -50 and 40 percent of the budget, respectively. There were also outlays for investment. Reports from financial agencies note unprecedented growing expenditure as a result of the different funding sources. In this regard, Pdvsa fiscal and quasi-fiscal expenses may amount to 35 percent of GDP ending this year, or more than USD 45 billion.

*Venezuelan Vice-President José Vicente Rangel announced demonstrations in defense of state oil company Petróleos de Venezuela (Pdvsa) beginning next week.
*"Some sectors target on Petróleos de Venezuela in an attempt at undermining the cornerstone of Venezuelan economy," Rangel Thursday said after opening the sixth mobile cabinet in Cumaná, the capital city of eastern Sucre state.
*In Rangel's view, a true debate on the issue of Pdvsa is most important for some sectors to "deal with the matter in a responsible, consistent, serious, unbiased way." However, the senior official made reference to a policy intended to remove democracy and good operations of national institutions.
*As stated by Rangel, some people still think that despite all the support given to President Hugo Chávez, he may step down.

*"These persons are quite away from reality, witch trainees who do not understand how does Venezuela work. If they dare to do anything, they will be defeated."

*Oil and Petroleum Minister Rafael Ramírez Friday said the state-run oil company Petróleos de Venezuela (Pdvsa) staff must "set Venezuela free from old agreements and deals that endangered and tied the economic sovereignty of the country."
*Ramírez criticized "the highly publicized oil opening implemented by the Fourth Republic and backed by former Pdvsa managers. They were the same people who staged the oil strike at the end of 2002."

*According to the high-ranking official, former Pdvsa management executed a series of agreements with multinational companies. "These deals were aimed at privatizing our (oil) industry by means of outsourcing."

*US Ambassador William Brownfield ruled out Friday any link of the United States with a drop in Venezuelan oil output.
*The US government "has no responsibility whatsoever for falling output in (state oil company Petróleos de Venezuela) Pdvsa or any other possibilities mentioned over the last few days and weeks here in Venezuela," the ambassador said in clear reference to the Venezuelan government accusations of alleged plot by CIA officials.
*Despite ups and downs in bilateral relations, Brownfield hoped that both Venezuela and the United States could work together in anti-drug efforts and anti-terrorist efforts and security.

*"Lack of cooperation, termination of exchange or common programs is a shame, because, all in all, ordinary citizens pay for it, because they are the real victim of terrorism, crime and illicit drug traffic," he noted.

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