www.forbes.com Reuters, 02.13.03, 5:43 PM ET CARACAS, Venezuela, Feb 13 (Reuters) - Venezuela's government, struggling with a drastic slide in oil revenues, pushed back maturities on about 30 percent of local bonds due Feb 17 with a debt swap on Thursday worth about $32 million, the Central Bank said. The bank said it exchanged 51.8 billion bolivares in bonds for four other debt issues, maturing between five and just over eleven months away. Supply far outstripped demand for the 200 billion bolivares ($125 million) in bonds on offer. Dollar conversions on the bolivar-denominated notes are based on the government's new fixed exchange rate of 1,600 bolivars to the dollar. Venezuela's debt swap is part of emergency measures adopted by the government to cope with the economic crisis after a two-month opposition strike slashed the vital oil exports that account for half of state revenues. Opponents of leftist President Hugo Chavez started a general strike Dec. 2 to press him into elections to end their bitter feud. While the strike has fizzled, it has disrupted oil output and shipments from the world's No. 5 petroleum exporter. The debt auction follows six previous exchanges by the Finance Ministry to ease a crunch in domestic payments during 2003 and the next two years when most of the nation's $8.75 billion in total internal debt matures. The government has said that it has sufficient resources to complete its obligations and said it will take the necessary measures to guarantee payments as oil production starts to recover. Officials have also guaranteed payments on the government's $20 billion in foreign debt. As part of its economic counter measures the government has cut its spending by 10 percent and introduced an austerity program, which includes tight currency controls and pricing curbs on basic products. From the end of last year the government has conducted a reorganization program in its internal debt, including a swap of more than $2 billion in its National Public Debt that came due between December last year and June 2005. Those notes were swapped for debt due between one and five years later.

www.latimes.com By Chris Kraul, Times Staff Writer

Venezuela's price and currency controls may not prevent further job losses and possible debt default -- fallout from the general strike.

CARACAS, Venezuela -- Their oil-based economy on the brink of collapse, Venezuelans braced for tougher times Thursday as the government imposed a risky system of price and currency controls. Most economists here say the controls offer little hope of staving off what's shaping up as a disastrous year for the Venezuelan economy, one they say could include hundreds of thousands of jobs lost, double-digit inflation and a possible default on $19 billion in foreign debt.             The economic crash is the fallout from a two-month general strike, just now ending, by opponents of President Hugo Chavez. Led by 35,000 workers of the state-owned oil company, the stoppage failed to drive Chavez from office but paralyzed the economy and cut Venezuela's crude oil production to a fraction of its normal level of 3.2 million barrels a day. Economists in Venezuela and on Wall Street are predicting that the nation's economy could shrink 8% to 22% this year, depending on how much of its oil production it can recover and how fast. Oil production and its indirect benefits account for roughly 40% of economic output. "We are seeing a social tragedy in the making," said economist Orlando Ochoa, who predicts that between 500,000 and 1 million jobs will be lost this year. Only war-torn or bankrupt economies like those of Bosnia-Herzegovina or Zimbabwe have had economic contraction as severe as what's in store for Venezuela this year, he said. Chavez announced the currency and price controls late Wednesday night, two weeks after he shut down foreign exchange altogether. He acted after about $9 billion in foreign currency left the country in the 13 months ended in mid-January, a seepage that was accelerating. The latest controls, the nation's third round of such policies since 1983, set a fixed value of 1,600 bolivars per dollar and limit prices for a group of essential goods. Although the controls may stop the outflow of dollars, they are expected to lead to higher inflation and a black market for scarce goods. The drop in oil revenue means the federal government may have a $9-billion budget deficit, one reason that U.S. debt rating agency Standard & Poor's downgraded Venezuelan debt to CCC+ in December, a sign that default in the near future is a strong possibility. "It's the worst rating we've given among the 92 governments we rate except Argentina, [which] is in default," said S&P's John Chambers. The dramatic drop in production has already plunged the economy into recession -- it shrank 7.5% in 2002 -- and nearly everyone here is feeling it. "We've never seen a recession like this," says Inaki Alverdi, general manager of the Alpitour tourist agency in Caracas, the capital. "If business only drops by 40% this year compared with last year, then that will be good. All of our customers booked for January, February and March have canceled. Nobody is traveling." Venezuela's economic problems didn't start with Chavez. In fact, Ochoa said per-capita income for Venezuelans dropped 25% over the 20 years before Chavez took power in 1999, a symptom of the corruption and inefficiency Chavez promised to fix during his presidential campaign. But Chavez has proved unwilling or unable to develop a consensus among rival factions, especially since April, when a coup briefly unseated him. An example of his tactics are the legal proceedings he recently opened against four local television stations for allegedly misusing the airwaves. It was seen as a move to muzzle his critics. "Venezuela is a catastrophe. You have the public sector in a major fiscal crunch, consumers hit by steep rises in unemployment and ongoing political uncertainty. Who is going to invest in this environment?" said Michael Gavin, an economist at UBS Warburg in Stamford, Conn. The exchange rate for the bolivar set by the new currency regime is considerably lower than its last close of 1,853 to the dollar on the free market, and far from its black market value, which is about 2,500 per dollar. Chavez also handpicked a five-member Currency Administration Commission to be in charge of distributing dollars among companies and individuals. Businesses say the government's exchange panel will have discretionary powers that will favor friends of the government and penalize the opposition. "Not one single dollar to the coup plotters," said Chavez as he announced the controls Wednesday. Apart from staple goods, price controls will also be imposed on medicines and house rents, to prevent exaggerated increases. Sources familiar with the state-owned oil company, Petroleos de Venezuela, say the company will be slow to regain its pre-strike production levels for several reasons. The thousands of wells that shut down once the strike started must be redrilled or reworked, which will take money the government doesn't have. Second, 880 technical workers who are best qualified to restart production were fired this week by Chavez for having gone on strike. Another discouraging note for Venezuela's economy is that the divisions separating followers of the president and his opposition seem to widen by the day. Efforts by the Organization of American States, the so-called Group of Friends multinational mediators and ex-U.S. President Jimmy Carter to broker an accord are going nowhere. Government and opposition forces made a series of preliminary goodwill agreements, including pledges of mutual respect, rejecting violence, and a plan to disarm the population, but failed to discuss an electoral way out until Carter put two proposals on the table last month . The first of these, to cut Chavez's term from six to four years by a constitutional amendment, is favored by the opposition. But the government has said it will discuss only the other option, that of a referendum on Chavez's presidency in August, or halfway through his term. The Group of Friends -- the United States, Brazil, Chile, Mexico, Spain and Portugal -- got into the act in late January by offering their full backing to OAS director Cesar Gaviria's effort. He remains in the capacity of a mediator, unable to strongly advocate for solutions himself. On Wednesday, Gaviria offered little hope of a short-term solution. "People have every right to be skeptical about the results at the negotiating table because we don't know if we are going to find an agreement," he said. "I would be skeptical, because we have worked several weeks and not made a pact. I can't say with all clarity that there is enough political will to come to an agreement."

www.forbes.com Reuters, 01.31.03, 4:58 PM ET   

CARACAS, Venezuela, Jan 31 (Reuters) - Venezuela's state-owned aluminum smelter CVG-Alcasa said Friday it had chosen a consortium comprising Swiss-based Glencore International AG, Pechiney of France <PECH.PA> and U.S. construction firm Fluor Daniel (nyse: FLR - news - people) to build a fifth production line at the plant.

The $650 million Alacasa Line V project will more than double the smelter's existing output capacity to 450,000 tonnes a year from the existing 210,000 tonnes.

The announcement was made by Alcasa president Dixon Rosillon, the state industrial holding Corporacion Venezolana de Guayana (CVG), which operates the smelter, said in a statement sent to Reuters.

sg.biz.yahoo.com Saturday February 1, 3:59 AM

CARACAS -(Dow Jones)- Venezuelan steel maker Siderurgica del Orinoco CA, or Sidor, said Friday that it's ready to resume full production as soon as its gas supply is restored from the current 40% of requirements.

The company said in a press release it's currently just operating its hot and cold lamination plants, after an ongoing 61-day-old general strike brought Venezuela's vital oil industry to a near standstill, severely affecting gas production, which is byproduct of crude oil extraction.

Oil output is now back to about a third of roughly 3 million barrels a day before the strike began.

Although many businesses have reopened, opposition leaders have said they won't officially call off the two-month-old strike unless President Hugo Chavez agrees to early elections.

Chavez has said his detractors must avail themselves of constitutionally-approved measures, such as an amendment shortening his term or a possible recall referendum in August, the midpoint of his term.

Chavez's critics blame his left-leaning policies for the country's deepening economic crisis, as the economy likely contracted about 8% last year amid unemployment of 17% and inflation of 31% sparked by the bolivar's devaluation. The currency lost another 25% this year before the government halted sales of foreign exchange Jan. 22 ahead of anticipated measures to stop capital flight and stabilize the bolivar.

Chavez, first elected in 1998 on promises to eradicate corruption and inequality, has blamed the recession on an "economic coup" by his opponents.

Venezuela's government last year capitalized $350 million of a $700 million debt Sidor had with the state-owned Bandes investment bank, raising the country's stake to 42% from 30%.

State-owned until 1998, Sidor is now semiprivate, with the remainder owned by the Amazonia consortium, which is made up of Mexico's Hylsamex SA (HLEFTY), Argentina's Siderar SA (E.SDR), Venezuela's Sivensa (E.SVS),and Brazil's Usiminas SA (E.UUS).

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com

new.stockwatch.com 2003-01-30 05:30 - News Release

HOUSTON, Jan. 30 /PRNewswire-FirstCall/ -- Lyondell Chemical Company today announced a net loss for the fourth quarter of $93 million, or $0.58 per share. This compares to a net loss of $53 million, or $0.46 per share, for the fourth quarter of 2001, and a net loss of $2 million, or $0.02 per share, for the third quarter 2002.

For the full year 2002, Lyondell had a net loss of $148 million, or $1.10 per share, compared to a net loss of $150 million, or $1.28 per share, for 2001.