We’ll head Down The Rabbit Hole in a few but first…Bitcoin.com reports that the use of cryptocurrency is at the center of Venezuela’s internal corruption scandal. As part of their sanctions avoidance strategy the Maduro regime has been using cryptocurrency for payments on crude shipments facilitated by middlemen then brokered through the government’s cryptocurrency regulatory agency, Sunacrip. $3 billion has been reported missing but documents reviewed estimated the number could be closer to $20 billion.
The former head of Sunacrip, Joselit Ramirez, has been arrested among other high level officials in the government as well as 20 lower level officials. All Bitcoin mining has been shut down “while things calm down”. We can add this to the virtual halting of crude export shipments as the Maduro regime and relatively new PDVSA (Venezuela government-owned oil company) head, Pedro Tellechea, who is also the new oil minister, try to figure out what has been happening, what’s going on now, and what they’re going to do going forward. It’s sort of a “Hold Everything!” plan. Oh, and Maduro has ordered a complete restructuring of Sunacrip (just like he’s ordered a complete restructuring of PDVSA…a lot of “complete restructuring” going on in the land of 21st Century Bolivarian Socialism)
And before we move on, it’s worth remembering that the former head of Sinacrip, Joselit Ramirez, joined former Oil Minister, Tareck El Aissami, as part of a group of individuals in (or formerly in) the Maduro regime indicted by the US government on narco- terrorism, corruption, and drug-trafficking charges in 2020.
I guess we shouldn’t be surprised. Maduro did, after all, shortly after taking power, install a convicted murderer as head of TSJ, Venezuela’s Supreme Court.
Then we have Nasdaq reporting that Venezuela’s PDVSA corruption probe has expanded and they are now reviewing unpaid bills by Maroil Trading, a petroleum coke (petcoke) exporter owned by Venezuela shipping magnate Wilmer Ruperti.
According to PDVSA, Maroil owes them $423.7 million for invoices originating with dozens of lesser-known companies acting as middlemen. Maroil is disputing the amount claiming the receivables list doesn’t reflect it’s investment in PDVSA’s shipping terminal which they say is at least $138 million.
I think we’re going to see a lot more stories like this as the probe and audit unfolds.
Now, let’s go Down The Rabbit Hole…
Chapter 4 continued…
…The government’s absurd explanations aside, a plan was needed going forward. An emergency 30 day rationing plan was put in effect, for the most part excluding the capital of Caracas, which, for the most part has become the new normal. Power rationing normally means four hour power cuts. For much of the country that was inverted and they only had power four hours per day.The government said normalcy would return soon. (We still haven’t seen it in much of the country) The spokesman for Sintraedelca, the electrical workers union disagreed. Other than sticking to their “boogeyman” theme and increasing security to safeguard the public from (nonexistent) further “attacks” there really wasn’t much of a plan other than to shorten the work day and send workers home at 2:00 PM.
The Electric Ministry’s solution sounded more like an ideological talking point than a solution. “Electrical workers will participate in union-related courses with Cuban experts to form socio-political cadres.” Huh? And exactly how does that solve the problem? If a statement from the government’s budget in 2013 (That was back in the days when the government actually published such things) is any indication things don’t look good for the future. “All problems will be solved by 2032 incorporating Popular Power… under socialist values.” So, how’s that working out so far?
It’s also worth noting that 40% of Corpolec’s allocated power output isn’t charged to anyone. (How’s that for a business model?) A major contributor to this problem is the Gran Mission Vivienda, Chavismo’s low-cost housing project. These houses have no electric meters! Electricity prices are so low in Venezuela that I never paid more than a dollar a month in 12 years. Combine this with a government that is broke and has no credit with anyone, anywhere and I wouldn’t look for a revenue bump for Corpolec any time soon.
In 2019 diminished expectations were the order of the day. With 45% of the country reporting frequent days without power various organizations asked for power at least for a few hours a day on the weekends. The metals-processing sector wouldn’t be returning to normal either. It relies on nodes which once they’re without power for a number of days are effectively dead. And if you thought it couldn’t get any worse, the Tuy pumping system, which supplies water to a large part of Caracas, would require about a third of the available power to restart since the power supply was so degraded. That leads us to the other part of the power crisis…the water crisis.
There is a reason that beginning with the first civilizations in Mesopotamia, at the confluence of the Tigris and Euphrates rivers, civilization has clustered around rivers and spread from there. Access to fresh water is essential to survival. Chavismo seems to have lost sight of this basic fact. In 1998, just before the election of Hugo Chavez, approximately 80% of Venezuelans had regular access to fresh water. Since the Chavistas took power that percentage has dropped to around 30% and who knows how low it will go.
Under Chavismo issues with water are nothing new. In recent years there have been thousands of protests annually in various communities and neighborhoods for lack of water although it must be said that it’s hard to distinguish them from the lack of power protests. It’s common to encounter roads barricaded in protest, burning tires, etc. Typically the government sends in some water trucks and things calm down… until the next time. Caracas is the perfect example of the problem.
Although in close proximity to the coast, Caracas sits well above sea level (900 meters) requiring it’s water supply to be pumped uphill to a significantly higher altitude for much of the city. When the power went out the Tuy pumping system went down leaving millions of people without water.
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