DomRep refinery-debt swap jolts Venezuelan opposition

Venezuela's political opposition repudiated state-owned PdV's $88mn debt-for-equity deal in the Dominican Republic as an "opaque" and "fraudulent" vehicle to strip Venezuela of its assets.

In a symbolic virtual session of the parallel national assembly today, the US-backed opposition demanded to learn the nominal value of the PdV and sovereign bonds that Dominican conglomerate Grupo Rizek's financial vehicle PATSA returned to Venezuela in exchange for PdV's 49pc stake in the 34,000 b/d Refidomsa refinery, which Grupo Rizek immediately on-sold to the Dominican government.

The bonds were retired above the secondary market value of pennies on the dollar but far below their nominal value, sources close to the deal told Argus last week.

"From not having anything, (PATSA) now has $88mn. Of course there is a hidden side to this," said Elias Matta, head of the opposition assembly's energy and oil commission. "There is too much darkness in this operation, we don't know the value of the bonds, why this group was chosen . . . This legitimate assembly is not going to endorse this irresponsible operation."

He compared the Dominican deal to PdV's May 2020 transfer of a 35pc stake in European specialist refiner Nynas, part of a restructuring that freed Nynas from exposure to US sanctions on Venezuela but which kept PdV on as a minority shareholder.

The opposition assembly was effectively replaced by a government-controlled assembly in December 2020 elections but continues to convene as the country's "legitimate" legislature, giving US-backed opposition leader Juan Guaidó a temporary platform to sustain his constitutional claim to an interim presidency in place of Venezuelan president Nicolas Maduro.

The Maduro government is hoping the Dominican deal, albeit modest, establishes a precedent for winding down more debt in exchange for much larger state assets, including oil and gas reserves.

The transaction itself appears to have caught the opposition by surprise. The finance ministry of the new conservative Dominican government, which is politically inclined toward Venezuela's opposition, said it consulted with the US government before conducting the operation to ensure that no sanctions were breached.

Although it has no practical effect, the opposition assembly debate today sheds light on nationalist sentiment that continues to imbue Venezuelan politics. It also shows that even governments sympathetic to the opposition cause have other priorities at home.

The deal comes on the eve of the resumption of Venezuelan political negotiations in Mexico on 3 September. Representatives of the Maduro government and the opposition signed an initial framework agreement on 13 August. The US has signaled a willingness to incrementally unwind sanctions in exchange for progress toward restoring democracy ahead of 21 November state and local elections.

By Patricia Garip

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