It is well known that Chavez gives away oil to many of his friendly countries (sometimes, if convenient to the unfriendly ones to) Most of these giveaways are done under the umbrella of programs approved by the Venezuelan National Assembly, many under terms that are really onerous to Venezuela, particularly a Venezuela that has so many problems and where money is short. In many cases, the receiving countries pay half within 90 days and the remainder in 15 years with ridiculously low interest rates.
Cuba gets away with not paying, by paying in kind with man hours of various services at wages and prices that Venezuelans wished they had.
And then there is Nicaragua. I had heard that Venezuela was using some convoluted way for giving away oil to Nicaragua, but until La Razon published the scheme on Sunday I had no idea of the magnitude of the rip-off on the Venezuelan people.
The document above is a proposal approved by President Chavez in April. It looks complicated. It is. Because it is designed to insure that Nicaragua ends up paying as little as possible in the end for our oil.
It works like this: PDVSA sells oil to Albanisa, a company owned 51% by Venezuela and 49% by Nicaragua. Albanisa agrees to pay for this within 90 days. Except that PDVSA transfers the debt to the Venezuelan Development Fund Fonden, which refinances the the debt, giving 50% of it a 14% discount and a year grace period for payment, and four years at 2% financing. But of course, of the 50% with the discount, Nicaragua ends up paying only 49% (if it does pay) because after all, Albanisa is 51% owned by Venezuela!
Thus, suppose it is US$ 100 million. The first 50%, is discounted 14%, so that the debt magically drops to US$43, but of course Nicaragua only has to pay 49% of that.
The other 50%, is refinanced to two companies, one called Caruna and the other Alba Caruna, also owned 51% by Venezuela and 49% by Nicaragua. Except these people get an even sweeter deal, as they get a two years grace period and are given 25 years to pay the remainder at the giveaway interest rate of 2% per year. Of course, half of that debt is owed by us Venezuelans.
This last part is almost like giving it away for free, not only are Caruna and Alba Caruna also owned by Venezuela with 51%, but if the Nicaraguans ever pay under the terms and world inflation stays at 2%, it would be like borrowing money free with huge discount to boot.
Most poor Venezuelans wish they could get such loans to, for example, fix their home, start a small business and why not, buy their family some food.
According to La Razon, this scheme is being used for Nicaragua to purchase some US$ 1.2 billion in oil a year, but in the end Nicaragua only pays for US$ 345 million a year.The whole thing then becomes a US$ 865 million a year give away to Chavez; buddies in Nicaragua.