Petroleos de Venezuela to Pay $700-750 Million in Taxes a Month

By David Papadopoulos and Vivianne Rodrigues

New York, April 25 (<a href=quote.bloomberg.com>Bloomberg) -- Petroleos de Venezuela SA will pay at least $700 million a month in taxes in the second quarter, easing concern Venezuela might default on its foreign debt after a two-month strike slashed government revenue.

The payments, which may be as high as $750 million, would be a 20-fold increase from a low of $37.5 million in January, said Alejandro Dopazo, the Finance Ministry's director of public credit, in an e-mail message. That is still below the $1 billion a month the company was paying before the strike began Dec. 2.

The surge in receipts indicates the company, which provides about half of Venezuela's tax revenue, is picking up the pace of collecting overdue payments from clients that accrued when it re- started exports in January, analysts said. That may help ease investor concern about Venezuela's finances, bolstering bond prices a month after President Hugo Chavez said the country needed to ``restructure'' its foreign debt.

The financial situation in Venezuela has stabilized,'' said Charles Cassel, who helps manage $725 million in emerging market debt at Standard Asset Management in Miami. For an external debt holder, things are getting better.''

Petroleos de Venezuela still has a way to go. ConocoPhillips, the largest U.S. oil refiner, said earlier this week that shipments from Venezuela haven't returned to normal, and are about 28 percent below what they were before the strike began.

Venezuelan bonds have rallied from a two-month low reached after Chavez's statements fueled speculation the country planned to default. The price on the country's benchmark dollar bond due in 2027 has surged almost 5 points, or $50 per $1,000 face amount, in six weeks -- even after sliding today to 63.75. Its yield has fallen 1.11 percentage points to 14.77 percent.

``There's still room for further gains,'' said Cassel, who said he holds some Venezuelan bonds.

The Finance Ministry has said the restructuring Chavez mentioned would be an exchange in which investors could turn in some of the $5 billion in foreign debt due this year for bonds with longer maturities to free up cash for the government.

Dopazo joined Finance Minister Tobias Nobrega and Luis Davila, Petroleos de Venezuela's chief financial officer, on a trip last week to New York, where they presented their budget figures to investors and analysts and sought to drum up demand for the exchange. They have said they plan to do the swap this quarter. Venezuela hasn't sold a foreign bond since 2001.

The strike, which opposition parties set up in an attempt to drive Chavez from office, throttled the country's oil output, lowering it to 150,000 barrels a day from about 3 million a day. While the government said it got production back to 3 million barrels a day in recent weeks, officials have said they struggled to collect payments. They said on March 28 that clients owed the company about $2 billion in overdue accounts. Last Updated: April 25, 2003 12:16 EDT