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Venezuelan Finance Minister Rules Out Citgo Petroleum Sale-Media
October 27, 2014

CARACAS, Oct 26 (Reuters) - Venezuela has ruled out the sale of state oil company PDVSA's U.S. refining subsidiary Citgo Petroleum, Finance Minister Rodolfo Marco said in an interview published in local media on Sunday.

"The sale of Citgo has been ruled out and the president has affirmed it," Marco told newspaper El Universal.

"Venezuela will continue with Citgo and will continue to invest in refineries," he said.

Cash-strapped PDVSA was hoping the sale could fetch between $8 billion and $10 billion, welcome revenue amid falling oil prices, major debt payments and an economy widely believed to be in recession.

Several analysts, however, had put Citgo's valuation at well below that, and the sale had come under fire locally from members of the Socialist government's leftist bloc who said it was a covert privatisation.

The government had shrouded the deal in secrecy, leaving analysts and industry players scrambling to piece together a rationale for the surprise divestment, and now the apparent reversal.

President Nicolas Maduro said last month Citgo would continue with a welfare project in the United States, a comment which was interpreted by some as a sign the government was reconsidering plans to sell, though he said nothing specifically about that.

Venezuela hired investment bank Lazard Ltd to handle the sale.

REFORMS EYED

Marco also said in the interview the OPEC country is working on the hot-button issues of a gasoline price adjustment and a unification of exchange rates, politically risky moves which would help shore up finances.

"The exchange rate, fiscal and gasoline issues haven't been shelved," Marco said. "These are issues we're working on and it's President Maduro who decides."

A package of reforms suggested earlier this year include unifying a complex system of exchange rates -- effectively devaluing the bolivar currency -- and hiking domestic gasoline prices, currently the cheapest in the world at less than 2 U.S. cents per liter.

"The minister is giving the same speech the government has been using for a while now: 'We're working on it'," said Asdrubal Oliveros, an economist with Ecoanalitica in Caracas. "The executive has to move on to implementing these measures ahead of a revenue drop in 2015."

Venezuela's reserve fund will have $4 billion by December, the minister said, reiterating Venezuela has enough money to continue funding its popular but costly social programs.

He also said again that PDVSA's $3 billion due in bonds on Oct. 28 would be met.

"With that guarantee of payment, (the idea) that Venezuela is falling into default collapses and we invite investors to believe in Venezuela, to invest in Venezuelan bonds."

Marco also said Venezuela is "analyzing" various aspects of a loan from Russia, but declined to elaborate.

Venezuela's central bank has not published GDP figures for this year, a move which critics say is an attempt to hide negative data.

"The Venezuelan central bank has done excellent work and 2015 will be excellent," said Marco, when asked about the data delays.

Source: Reuters

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