Venezuelan Oil Company to Reduce Executive Pay, Freeze Worker Salaries, and Maintain Investments
Mérida, April 27th 2009 (Venezuelanalysis.com) — Rafael Ramírez, the president of Venezuela's state oil company, PDVSA, announced on Sunday that the company will reduce executive salaries by 20% and will not award bonuses or negotiate worker salary increases this year, in order to maintain the company's rate of investment and emerge solidly from the world economic crisis.
"We are not going to detain our investment plan," which amounts to $14 billion dollars, said Ramírez, who is also Venezuela's minister of energy and petroleum. "We have increased our rate of investment in the country like never before and we hope to continue doing so," he added.
Maintaining PDVSA's rate of investments in new technology and contributions to the National Development Fund (FONDEN), which finances the national government's social spending, will help PDVSA and Venezuela as a whole emerge from the crisis in an advantageous global position, Ramírez said in a video conference.
The company will also prioritize the formation of mixed enterprises with international oil companies to exploit Venezuela's vast crude reserves in the Orinoco Oil Belt. According to the Venezuelan daily Ultimas Noticias, on Tuesday, Ramírez plans to meet with representatives of 17 international oil companies that are interested in Orinoco contracts, in which PDVSA holds a mandatory 60% controlling share. PDVSA has already signed such contracts with corporations from dozens of countries.
In order to maintain these investments, a 40% reduction in company spending is necessary, Ramírez said. "If we want to maintain the functioning and expansion of our company, we have to take a hard line in the administration of resources, and reduce costs and spending," said the minister.
This will include a 20% reduction of salaries for Ramírez and all executive level company managers, and a freeze on bonuses. Ramírez said the reduction will bring his salary down to 10,700 bolivars ($5,000) per month.
"We ourselves want to assume… the attitude that we should have in order to defend the industry and all our benefits and plans for expansion… we must defend the industry with a high level of conscience," Ramírez said Sunday.
The salary reduction responds not only to the company's budgetary needs, but also to President Hugo Chávez's presidential decree last month, which aimed at eliminating exorbitant executive salaries, bonuses, and unnecessary spending in government institutions.
In another measure to cut costs, Ramírez said the company will not negotiate any increases in worker salaries this year. Citing internal company opinion polls, the minister said four-fifths of the PDVSA workforce agree with the pay and benefit freeze, since they are "experienced in combat in defense of our sovereignty."
However, the general secretary of the Anzoátegui state chapter of the petroleum workers federation (Fedepetrol), José Bodas, said it is false that four-fifths of the workers are in agreement with the freeze. Bodas accused Ramírez of lying about the worker opinion polls as well as his own salary as president of PDVSA.
"Minister Rafael Ramírez and all the PDVSA management should have no doubt that the oil workers are going to fight for our contract, and we will mobilize ourselves to achieve a substantial salary increase," said Bodas , who is also a member of the union current C-CURA, which is considered to be of the radical left wing among Venezuelan worker unions.
"To speak of a [worker union] contract without a salary increase is a robbery of the workers of PDVSA," said Bodas in a statement released by C-CURA.
In other sectors of the PDVSA workforce, last week more than a hundred workers from PDVSA Gas Anaco protested outside the Labor Ministry for better salaries and job protection, and workers from PDVSA's cafeterias held a one-day strike for better working conditions.
Meanwhile, PDVSA and the Brazilian state oil company Petrobras have revived talks of their collaboration on the construction of the Abreu e Lima oil refinery in north-western Brazil. Petrobras manager Paulo Roberto Costa said PDVSA must decide by May 25th whether it will participate in the project.
Venezuela originally offered $US 4 billion in financing to the Abreu e Lima project in March 2008, and had agreed to be the minority partner with a 40% share, but the collaboration was suspended later in the year. The refinery is scheduled to begin processing 200,000 barrels of crude per day in 2011, with or without Venezuelan involvement.
