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Venezuela's Energy Minister: The tale of Pinocchio?

By Veneconomy

25.05.05 | Pinocchio is the leading character in the children’s story by Carlo Collodi. As everyone will recall, Pinocchio fell into the trap of telling a lie to cover up an earlier one, then he invented another to cover up the second, and on and on. And every time he lied, his nose grew as a punishment.

It would seem that Energy and Oil Minister Rafael Ramírez (who is also President of PDVSA) is a Pinocchio, Bolivarian style. The most recent lies apparently told Minister/President Ramírez have to do with his attempts to justify why the monies of PDVSA have not reached the Central Bank.

One of the apparent falsehoods proffered by the Minister/President is his claim that production from the Orinoco Oil Belt strategic alliances (617,000 b/d) generates dollars that do not enter the country. It would be logical for these companies to retain part of their dollar income abroad until their annual shareholders’ meetings decree the dividends, so as to be able to cover debt servicing and other expenses. But there is a tremendous difference between that situation and saying that foreign currency does not enter the country. If this were true, then the four strategic alliances would not have paid, for example, royalties or their expenses in Venezuela, which apparently amount to nearly $600 million for the year to date, quite apart from income tax, which could come to an additional $1 billion.

Another dubious statement by the Minister/President -which, while not a lie itself, would seem to conceal a falsehood- was when he claimed that $1.418 billion were used for payments abroad. If that were the case, this would be $40 million more than was spent on this same item during the whole of 2004. Ramírez gave no explanation at all of the reasons for this increase, but independent analysts suggest that it could be due to the huge quantities of gasoline that had to be imported to cover shortfalls from the refineries, which are still not running normally thanks to poor management by the new PDVSA. On top of that, Venezuela is being forced to absorb losses resulting from having to purchase production abroad, owing to its inability to meet supply contracts such as the agreements signed with Argentina.

Pinocchio’s story had a happy ending. He came to be truly repentant for having lied and, as a result, his nose shrank to its normal size and didn’t grow again. VenEconomy hopes that the government will mend its ways so that Venezuela, too, can have a happy ending.

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