Petroleos de Venezuela, the
state-owned oil company of Venezuela is a very corrupt company. This is proving
fatal for Venezuela since oil is the only source of income for the country,
apart from drug trafficking. Both activities are being executed with
characteristic inefficiency.
Corruption is manifest both in
the anatomy and physiology of the company.
ANATOMY
1.
The president of the company is also the
minister of Energy and Petroleum. This duality eliminates all possibilities of
checks and balances. The same person should not be the supervisor and the
supervised. As it is, the minister and
PDVSA’s President Ramirez is one of
the members of the Gang of Four (Maduro,
Giordani, Merentes and Ramirez) that control and dispose of national income. The
management of the company is not autonomous but a simple extension of the
Executive Power. The money is going to parallel funds such as FONDEN, a development fund that is controlled
by the gang.
2.
The
company has no less than 20 affiliates that do work totally unrelated to its
core activities: social work, food imports and distribution, housing, community
developments, agricultural and livestock activities. The corporation has lost
its focus and has been converted into a
“socialist enterprise”. Pig raising farms, chicken imports and oil production
are not compatible. As a result significant corruption has taken place, as it
happened in the case of PDVAL’s imports of some 180,000 tons of semi-rotten
food, a $ 2 billion fraud that remains unpunished.
3.
The company has signed contracts with more than
15 foreign partners to produce and upgrade the Orinoco heavy oil deposits but these
partners have been selected on the basis of political and ideological reasons.
They are largely inefficient and ignorant of the ways to develop this heavy
oil. So far they have been simple by-standers, reluctant to invest billions of dollars in an
operation controlled by a discredited company such as PDVSA. As a result the
immense Orinoco heavy oil resources remain essentially untapped after 15 long
years of PDVSA’s mismanagement.
PHYSIOLOGY
1. Many
company contracts are being awarded without a bidding process and, in several
instances, to friends or relatives of PDVSA’s managers. This has been the case
with huge contracts given to companies like Petro Marine (renting of drilling
barge Aban Pearl), to Derwick and
Associates or to shipping contractor Wilmer Ruperti. It has also been the case
with the renting of drilling rigs from ghost companies or a no-bid contract
given to ECOINCA, a company owned by a relative of a PDVSA manager.
2. Since
the company does not have money since all income is being diverted to political
uses, it has been incurring in significant debt, now of the order of $80
billion. This level of debt is combined with unpaid financial obligations to
expropriated companies and dismissed employees. For all practical purposes
PDVSA is bankrupt
3. The
company is politicized to the core. Employees are obliged to attend military
drills in preparation for a U.S. invasion that exists only in the imagination
of the government. They are ideologically indoctrinated. Political dissenters
have been expelled from the company and/or defined as infiltrators.
4. PDVSA is giving about 300,000 barrels per day
of free or strongly subsidized oil to countries that are political satellites of
the Venezuelan regime: Cuba, Nicaragua, Bolivia, Ecuador and several small
countries in the Caribbean. It also has to send about 300,000 barrels per day
to China in payment of loans that are already being spent by the government
without any accountability.
Since the country depends on oil
income this situation has generated national economic and social chaos and a
political crisis that grows daily by leaps and bounds.
It is my considered opinion that
the government of Nicolas Maduro could fall at any moment. However, the level
of corruption is so high in government that such a change might not be able to
take place peacefully. There are too many criminals in power who will not
accept an electoral defeat. The two other ways a change in government might
take place are: (a), a military coup; and (b), a popular rebellion, Arab-spring
type. In Venezuela traditional military coups have been the predominant mechanism.
This time, however, the mood of the country seems to be ripe for an all-out
popular protest, similar to the one that already took place in 2002 and led to
Chavez’s brief ousting from power. Venezuelans are rapidly getting to the point
of saturation and disgust with the political situation.
Any seemingly unimportant incident can trigger
a major social and political upheaval. We
are walking on eggs.
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