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Colombia will safeguard Monómeros: Ex-chair


By Patricia Garip / Argus

BOGOTA
Petroleumworld 09 16 2021

Colombia's intervention of Venezuelan fertilizer company Monómeros will protect the strategic state-owned asset and ensure supply to Colombian farmers, the company's former board chair Carmen Elisa Hernandez told Argus.

Barranquilla-based Monómeros Colombo-Venezolanos has been administered by Venezuela's US-backed interim government since April 2019. But the company has come under severe financial strain, mainly because of a lack of access to credit from Colombian and foreign banks wary of breaching US sanctions on Venezuela, despite a license from the US Treasury's Office of Foreign Assets Control (Ofac) that administers the sanctions. As a result, Monómeros

has been forced to tap more costly credit lines from international raw material suppliers such as Mosaic and Nitron, said Hernandez.

Although the firm has not fallen into default, the debts have become more difficult to service because of the depreciation of the Colombian peso. Some creditors were starting to demand upfront payment to continue supplies, she said.

Hernandez resigned on 12 September after Monómeros management and other board members resisted the intervention by Colombian corporate regulator Supersociedades, taking a "confrontational" approach with which the Venezuelan engineer fiercely disagreed.

While Supersociedades was already reviewing Monómeros' books, the decision to assume control of the company for a second time since 2019 was accelerated by Venezuelan president Nicolas Maduro's public demand to return the company to his government's hands. As delicate Venezuelan political negotiations unfolded in Mexico, Maduro's remarks rippled through the fertilizer industry, casting doubt on who controlled the company and making it even harder for Monómeros to operate.

"I saw that (intervention) resolution of Supersociedades as protection, because while the control is in place, the shareholder cannot sell or do anything with the company," Hernandez said, adding that suppliers and distributors were reassured by the regulatory action.

Other Monomeros executives saw the Colombian move as a threat, putting the opposition leadership in an awkward position with respect to its steadfast political ally in Bogota.

Vulnerable asset

Hernandez noted that Monómeros is more vulnerable than Venezuela's biggest state-owned overseas asset, US refiner Citgo that is also controlled by the opposition, while its parent, Venezuela's national oil company PdV, is held by Maduro. Houston-based Citgo, which is the target of myriad creditors kept at bay by the US government, sits below Delaware-based Citgo Holding and PdV Holding, plus the opposition-appointed "ad hoc" PdV legal board in the US.

In contrast, Monómeros is controlled by Venezuelan state-owned petrochemical company Pequiven in Caracas, but an "ad hoc" Pequiven board was never registered in Colombia. Monómeros has a "more fragile political presence that is only protected by the Colombian government," Hernandez said.

After reluctantly accepting the resignation of another key technocrat in his thinning ranks, opposition leader and interim government head Juan Guaido committed to an external audit and restructuring of Monómeros in coordination with Colombia.

Too big to fail

Hernandez asserts that Monómeros is too big to fail for Venezuela as well as for Colombia, where it accounts for 40pc of the local market. The company is especially important for small farmers and for Colombia's potato, coffee and oil palm growers, she said.

Senior opposition figures have told Argus that aside from the credit challenges, Monómeros has been exploited for political patronage from within their ranks, challenging Guaido's claim to responsible stewardship of Venezuela's international assets. Hernandez said she was never subject to political pressure during her more than two-year tenure.

"I don't want to engage in hearsay. We are in a country of laws, and the institutions will investigate and determine what is the truth," she said. "I was never pressured by Juan Guaido or (Voluntad Popular party leader) Leopoldo Lopez," she said.

Guaido's administration and Voluntad Popular both issued statements of support today for a fresh audit and restructuring of the company.

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