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Hugo Chavez's regime is bankrupting the oil piggy bank

By Veneconomy

15.06.05 | Once upon a time there was a country called Venezuela that had a first world oil industry managed with professionalism and transparency… Today that industry is traveling the road to extinction.

A report by PDVSA’s Financial Division on the state of the oil holding company’s finances and operations has revealed some interesting facts that appear to back this claim. First it states that social expenditures by the state-owned oil company in the first quarter of 2005 came to $850 million (including contributions to the Special Development Fund), 83% more than the $465 million provided for originally. To date, PDVSA has devoured more than 46% of the amount budgeted for social spending for the whole of 2005. It also states that operating expenses for the same period were almost 20% higher than budgeted. Commitments to the tune of $1.606 billion have been made to date.

Besides this, the Finance Division reveals that, between January and March this year, only $628 million of the $825 million allocated to the investment budget have been executed.

Meanwhile, production continues to decline, according to the IEA’s and the OPEC’s figures, who estimate that Venezuela’s production comes to only 2.6 million b/d, and not 3.2 million b/d as the government insists.

Moreover, the figures show that PDVSA contributes daily less to the Treasury. Its contribution in taxes for 2005 is estimated at $14.546 billion, 12% less than in 2004. Those who defend the government claim that PDVSA’s contribution in taxes has dropped as a result of the internationalization of the industry at the end of the 80s and throughout the 90s. However, the official figures provided by PDVSA’s Finance Division show that these people either don’t know what they’re talking about, are ill informed or, worse, are lying with malice aforethought.

In the meantime, claims of corruption abound. Deals that are clearly unfavorable for the country are coming out into the open, such as the sale of Citgo and more recently the donation of Orimulsion’s rights and patents to the Republic of China. Besides, PDVSA plans to apply taxation rules and changes in the game rules for foreign investors, who are helping to prevent the production crisis from deepening still further.

Given this scenario, PDVSA looks to be nowhere near what it was, much less what it should be. If it continues along this path, it will not even be of use to the revolutionary process to enable it to cover its populist demagoguery. The big Bolivarian lie will become increasingly exposed for what it is, revealing the truth that the revolution is condemning Venezuelans to greater poverty.

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