Venezuela’s Oil Company Injects $56 Billion into Social Development

Mérida, June 21^st 2010 (Venezuelanalysis.com) – Petroleos de Venezuela (PDVSA) assigned $56.3 billion of its budget to social development between 2001 and 2009, according to the state owned company’s president, Rafael Ramirez, speaking on Televen yesterday.

The money went to health, education, food, and other programs. Ramirez specified that $28 billion went to the National Development Fund (Fonden, which in turn has spent the money on public projects such as transport and energy infrastructure, technology, housing, and medicine), $1.8 billion went to communities, $2.06 billion went to the basic literacy program Mission Ribas, and $5.7 billion went to the health mission Barrio Adentro.

Also, PDVSA assigned $3.6 billion to agricultural projects, $2.8 billion to infrastructure projects, and $2.8 million to housing, said Ramirez.

According to the Central Bank of Venezuela (BCV) PDVSA directed a total $13.3 billion (or 7.3% of the GDP) to social projects in 2006.

Such social spending is in addition to the high social spending the Venezuelan government has been including in its budgets. Almost 46% of the government’s 2010 budget is allocated to social spending such as public education, social development, health care, and the social missions.

In roughly a similar period, from 2002 to 2009, PDVSA earned an extra $85.7 billion as a result of the Plan of Full Petroleum Sovereignty which involved adjusted taxes and royalties, Ramirez explained. In 2005, Venezuela increased oil royalties from 1% to 16.66% and in 2008 the government implanted a new tax on extraordinary oil profits.

However, the Venezuelan daily El Universal, using figures from the oil company’s annual reports, states that PDVSA’s spending on the social programs called “missions” decreased by 82% from 2007 to 2009.The statistics, which pertain only to the social missions and not to other spending on community projects, agricultural credits, infrastructure and other development projects, show that in 2007 PDVSA designated $5.3 billion to the missions, $1.9 billion in 2008 and 942 million in 2009, when oil prices plunged.

Ramirez PDVSA had become stronger despite the fact that “in 2008 the price of oil per barrel was $140 dollars, and in 2009 it fell to $57.”

Venezuela has 212 billion barrels of petroleum in certified reserves, Ramirez said. It has produced just over 3 million barrels per day since 2004.