http://havanajournal.com/business/entry/cuba_owes_891_million_to_venezuela/

HavanaJournal.com: Cuba Business

Cuba owes $891 million to Venezuela

Posted January 15, 2004 by publisher in Cuba Business.
---------------------------------------------------------------------------------------------------

MARIANNA PARRAGA | EL UNIVERSAL | [url=http://www.eluniversal.com]http://www.eluniversal.com[/url]

Data show that the island nation made no payment in 2003
Five oil shipments had not been registered on Pdvsa’s books by December

The 2000 Cuba-Venezuela Integral Cooperation Agreement, which establishes preferential conditions for the sale of oil to the island nation, continues to feed the debate. Oil experts have said that the raison behind the controversy is Cuba’s bad reputation as a client.

Many of the finance employees that the state-owned oil firm Petroleos de Venezuela (PDVSA) fired during the December 2002-January 2003 general strike have insisted that Cuba has been delaying payments since day one of the agreement. This almost caused the suspension of supplies in 2002, shortly before Pdvsa accepted to restructure the debt under the condition that Cuba will make all payments on time.

By December 2002, Cuba was paying 20 to 30 billion dollars monthly and had reduced its debt with Venezuela by 140 to 160 billion dollars, as shown by documents of the Venezuelan oil company. But the strike in Venezuela resulted in the removal of most Pdvsa managers who had engineered the restructuring.

Nearly one year after the end of the strike, Cuba’s debt reaches 891 million dollars. Information obtained by El Universal shows that the debt includes a 240-million-dollar long-term fraction - due in December last year - that must be paid with promissory notes from the National Bank of Cuba, and a 651-million-dollar short-term fraction, of which 475 million are due and 35 million are delay interest.

An evaluation of the long-lasting Cuban debt reveals the island nation made almost no payment to Pdvsa in 2003, nor did it redeem long-term debits due last month.

Cuba has delayed the payment of $62 million for more than 300 days, $121 million for more than 200 days, and $122 million for more that 100 days.

Moreover, Venezuela has received no more than 20 of the 92 promissory notes should have filed for shipments made January 2003 and March 2004.

This causes an accounting disorder that might explain the financial imbalances Pdvsa is exhibiting lately. For instance, of the 651-million-dollar short-term debt, $48.6 million resulted from the five last shipments already delivered that, by December, were still to be registered on Pdvsa’s books.

Industry sources say that this accounting disorder has reduced the firm’s cash flow, caused an abnormal use of the Fund of Investment for Macro-Economic Stabilization (FIEM) and deteriorated Pdvsa’s position in the international financial markets.

However, Energy Minister Rafael Ramírez has said that the Cuba-Venezuela agreement “has been stabilized” after the imbalance caused by the strike.

Ramirez added that the long-term debt is being dealt with by the Ministry of Finance.

“There is no problem with Pdvsa regarding Cuba’s debt or payment delays,” he said.

Translated by Edgardo Malaver

Member Comments

No comments have been posted yet.