Economy
March 02

State corporations in default with contractors and workers
The Venezuelan state is in default with contractors which, in turn have failed to pay their employees. The companies providing services to state-run oil company Petróleos de Venezuela (Pdvsa) and the Venezuelan Guayana Corporation (CVG) are going through the most critical situation.

The boards of directors of the state companies are negotiating with suppliers to settle debts, but the liabilities of both the oil industry and Guayana corporations would be over USD 8 billion. 

According to the financial statements of Pdvsa, the holding's debt to suppliers was USD 7.8 billion at the end of the third quarter of 2008. Meanwhile, CVG contractors estimate that delayed payments amount to USD 372 million.

Failure to honor debts comes amidst crumbling oil prices. So far this year, the Venezuelan oil basket has averaged USD 36 per barrel, while financial officials estimated the oil price at USD 60 to calculate FY 2009 budget. The funds the Treasury has received are used to meet the minimum requirements for the operation of the state. In almost two months, the government has disbursed 9 percent of the current fiscal year expenditures, which amount to USD 77 billion.

State-run aluminum smelter "is operational"
President of Venezuelan state-run aluminum smelter Alcasa said that the company is 75 percent operational, as 164 cells are out of service for maintenance purposes. However, he conceded that the firm is facing "some problems" that require USD 33.95 million in investment.

César Aguilar, the president of Alcasa, considers that adjustments and investments are necessary to upgrade plants and honor debts. However, he adds that the company has also been affected by the fall in the price of aluminum.

"We are selling at USD 1,300 some products that cost USD 4,000 to produce," said Aguilar. He stressed that Alcasa production depends on raw material supplies and the lease of machines and equipments owned by contractors. 

Aguilar also listed cash flow deficiencies among the problems. "Last year, we closed with a cash flow between USD 98 and 100 million, but it dropped almost USD 60 million."

Pdvsa pays millionaire debt to suppliers
State-owned oil company Petróleos de Venezuela (Pdvsa) is taking steps to repay debts pending for more than four months to about 6,000 contractors and suppliers, government officials reported on Monday.

Pdvsa said in a statement that, as of March 2, it will launch a massive plan of "payment updates" after completing the "debt review and assessment." 

The oil company stressed that the process will benefit some 6,000 local and foreign contractors and suppliers.

Minister of Energy and Petroleum and President of Pdvsa Rafael Ramírez said that the state-run oil company is reviewing the pricing schemes, due to changes in the cost and expenses of the oil sector as a result of the global financial crisis, AP reported.

March 03

Pdvsa CEO: Venezuela is cutting costs to cope with financial crisis
The Venezuelan government is reducing spending to "tune up the engines of the economy" and to better address the global financial crisis, said Minister of Energy and Petroleum Rafael Ramírez.

In his statements, published in a press released by the Ministry of Communication, Ramírez acknowledged that in previous years the high prices of oil led to situations of "excessive spending." 

"We have to adapt to a new situation that does not admit any waste. We must avoid any expenditure that is not top priority," the Petroleum Minister said in reference to state-run oil company Petróleos de Venezuela (Pdvsa). Ramírez is also the president of the oil holding.

Ramírez underscored that Venezuela is monitoring the international crisis "to work on possible scenarios" and make decisions "unhurriedly," as otherwise Venezuela's "economic development" could be jeopardized, EFE reported.

Oil workers ask government to sign new collective bargaining agreement
Venezuelan oil workers, who are requesting a renewal of their collective bargaining agreement and have complained about the alleged breach of employment benefits related to health and food, among others, will talk to government authorities to find a solution to their situation.

Douglas Pereira, the head of the oil union in the city of Bachaqueros, Zulia state (western Venezuela) said to private news TV network Globovisión that some sectors are interested in ignoring oil union representatives. Pereira added that it has been impossible to elect new union leaders in polls coordinated by the National Electoral Council (CNE), because of the numerous elections held in Venezuela.

He called for compliance with the oil workers' collective agreement, stressing that "some labor benefits related to health as well as payments and food bonuses, among others, have been breached."

March 04

Pdvsa partly repays debt to contractors; renegotiates rates
State-owned oil company Petróleos de Venezuela (Pdvsa) started to repay debts to 90 percent of contractors. However, the holding officials are conditioning payments to large creditors. 

Minister of Energy and Petroleum and President of Pdvsa Rafael Ramírez said in a statement that "the state-run oil company is reviewing low priority expenditures and the rates under the agreements with some 250 companies, as the structure of spending has been changed."

In this connection, Eulogio Del Pino, Pdvsa's Vice president of Exploration and Production said to El Universal that the Venezuelan oil company would pay a part of the debt to some companies, depending on the amount of the debt. In parallel, the conglomerate is engaged in engaged in talks for contractors to cut rates and to define a payment schedule for outstanding debt.

The amount of the debt has not been disclosed by officials, but Pdvsa financial statements at the end of the third quarter of 2008 estimated the outstanding payments to suppliers at USD 7.8 billion.

March 06

Twenty-four oil drills idle amidst declining Pdvsa revenues
Seventeen oil rigs were halted in Monagas state (eastern Venezuela), five drills were halted in Zulia state (western Venezuela) and one drill was halted in the state of Anzoátegui (eastern Venezuela).

Overall, oil contractors have halted operations in 24 rigs, according to trade union representatives of the oil sector. The union leaders said that the shutdown is due to the fact that the revenues of state-owned oil company Petróleos de Venezuela (Pdvsa) continue to dive, which has forced the holding to freeze some projects and stop payments to the oil contractors operating the rigs.  

Raúl Parica, leader of an oil trade union, said that Pdvsa is paying a part of its debts to some of the contractors only. "If this continues, new layoffs will be unavoidable."