: PDVSA- A murky deal
that raises some questions
PDVSA has announced the sale of 10% of its shares in PetroPiar Upgrader to the CITIC Group, owned by the Chinese State, and that CITIC will, in turn trade this 10% on the Hong Kong Stock Exchange.
This operation has a number of dark sides to it.
First of all, it is not known how much CITIC is to pay PDVSA for the shares, what price CITIC hopes to get from its public offering of those shares on the Hong Kong Stock Exchange or who will get a slice of the profits obtained from these transactions.
Another question this raises is: Why is PDVSA selling 10% of its 70% holding in PetroPiar?
There are two possible answers to this: one is that PDVSA is short of cash and this deal will allow it to raise funds for the numerous social projects and, maybe, for investing in maintaining the oil infrastructure; the other is that it could be a long-term plan to encourage investment in PDVSA's projects.
Another question is: Why didn't PDVSA go directly to the Hong Kong Stock Exchange without the intermediation of CITIC and so avoid sharing any profits with the Chinese state-owned company and others involved in the deal? It is also worth asking why the Hong Kong and not the New York Stock Exchange?
Finally, there is the uncertainty about what the government will do next in this matter. Will it use the Hong Kong Stock Exchange to place Venezuelan debt instruments? Is it thinking of selling shares in other PDVSA affiliates where PDVSA also has a holding of more than 60%?
The only thing that this murky operation shows is that efficiency and transparency continue to be inexistent in the government of the Castro- Chavista revolution.
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Editor's Note: This commentary was originally published by Veneconomy , on March. 08, 2012. Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld News 03/09/2011
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