When the history of the past 14 years is finally written, people will wonder how a Government claiming to be revolutionary and a defender of the country’s sovereignty and the “people”, managed to give away so much of the “people’s” money just to cover up mismanagement and in the interest of buying allies around the world.
In the latest such transaction, PDVSA has given away money to Uruguay, a country with a higher GDP per capita than Venezuela, not once, but twice, in one of the strangest transactions to date.
It all begins in 2006. PDVSA begins sending oil to Uruguay’s oil company Ancap under the following exceedingly favorable conditions: 75% to be paid in 30 days and the remainder 25% in 15 years at the absurdly favorable interest rate of 2%. (Think about it, Venezuela, which needs to pay 10-12% interest rate when it issues bonds, only charges 2% to a country that can issue bonds paying only 3% interest in 15 years)
By now, Ancap owes Venezuela US$ 718 million, but if the interest that needs to be paid is included, Ancap will owe US$ 860 million.
Curiously, just after Venezuela finally managed to enter Mercosur through the backdoor, PDVSA has agreed to accept that Ancpap pay it with PDVSA bonds worth US$ 860 million in face value, but which are only worth US$ 510 million today. Thus, PDVSA “receives” bonds worth US$ 810, registers that it got paid that amount, but if it sells them gets US$ 343 million less. But Ancap only pays US$ 510 million of its money, for oil worth US% 710 million plus interest.
Thus, Ancap, which already got a sweet deal with 2% financing for 15 years so that Uruguyans can vacation in Punta del Este, now gets a substantial discount for its debt.
The only benefit for PDVSA is that it gets the money today, rather than over the 15 years and Ramirez and Co. can use the money elsewhere.
But there is absolutely no justification for the discount. PDVSA is using an interest rate, as if Ancap were PDVSA, which needs to pay high rates. In fact, the transaction is being funded by the Government of Uruguay, which is lending Ancap the US$ 510 million at a rate of 4% interest plus inflation. This is easy for Uruguay to do, since it can borrow at even lower rates than that.
And, of course, we are supposed to believe this had nothing to do with paying back Uruguay for allowing Venezuela to sneak into Mercosur. Sure!