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Venezuelan State Enterprises Sign Agreement to Develop Orinoco Region

By Tamara Pearson | Venezuelanalysis | August 21st 2012

Mérida  –  Yesterday President Hugo Chavez met with over a thousand workers in the large hall of the Caruachi Hydroelectric Complex of the Guyana Venezuela Corporation (CVG) to sign an agreement to begin the organisation and construction of the Orinoco Axis of Development.

Representatives of Venezuela’s state-owned oil company PDVSA and CVG signed the agreement to collaborate in the creation of this “axis of development” in the Orinoco area, one of several such axes in specific regions that Chavez has proposed in his plan for 2013-2019. CVG is a mostly worker co-managed entity that extracts and processes primary material such as iron, gold, and bauxite.

Chavez said the strategy was to unite the north and south of the Orinoco zone. That is, to unite the Orinoco Oil Belt to the north of the river, which holds the world’s largest oil reserves, with the Industrial Mining Belt to the south of it. However, Chavez said the area also includes 600,000 hectares where agricultural production can be fostered. The axis will have an area of around 100,000 square kilometres in total.

The union between PDVSA and CVG is the result of years of discussion, Chavez said, “and is related to large historical objectives which we have proposed for ourselves… and the need for planning… in the long and medium term”.

CVG president Rafael Gil Barrios explained to the press today that the PDVSA-CVG agreement is already being concretised, including the creation of mixed companies (smaller companies run by the two larger main ones) such as Petro San Feliz. CVG will own 10% of this company, of the 70% of stocks that PDVSA already owns.

Steel projects, Workers and Mercosur

Workers from CVG, from the Sidor steel plant, and from PDVSA attended the meeting with Chavez, during which he also approved US$ 324 million for Sidor, to go towards increasing its production. That includes $18.5 million to update rust removal technology and $250 million for a project to install machinery for round billet mould assembly. The steel tubes produced from this machinery will benefit the petroleum industry in the Orinoco oil belt. The financing comes from agreements with China.

Chavez asked workers to audit the projects and to protest when work is taking too long or is halted. His comment comes as some cement workers have voted to go on national strike “against the policy of the Chavez government of freezing collective contracts in order to please the capitalists”, as stated by the Revolutionary Socialist Current two days ago.

“Just like when you all protest, and rightly so, when for example, the dividends don’t arrive… so I approved Bs 600 million recently for such loans,” Chavez said, adding that, “Workers have the right to protest in a thousand ways, but not damaging the production of … the [state owned] companies of Guayana… there are mafias who buy off the workers…and their managers… they have to be denounced.”

The president also emphasised the importance of the axis and its region in Venezuela’s incorporation into the trade bloc, Mercosur, formalised in July.

“We have to start to construct the railroad from the Caribbean (Puerto La Cruz, Venezuela) to Manaos (in the Brazilian Amazon)… this is vital and Guayana’s role in that is vital,” Chavez said and also announced that he was forming a new presidential commission to deal with Venezuela’s integration into Mercosur. The commission will consist of mostly selected members of his cabinet and is presided by Foreign Minister Nicolas Maduro and Mercosur executive secretary Isabel Delgado.

Nicolas Maduro, added, “This large economic force, this mining, industrial, petroleum, agricultural force is our country’s direct relationship with Mercosur… the Mercosur commission starts today (Monday) and they have oriented us towards forming a Business Council and a Worker Council of Mercosur”.

“There’s a lot of motivation to increase the productive and exporting potential Venezuela has in the large market of South America, which is Mercosur,” Maduro concluded.

The government re-nationalised the Sidor steel plant in 2008, and CVG workers in July 2009 proposed a model of production and workers control which Chavez supported, called Plan Socialist Guayana 2009-2019.  The plan involved transforming the state owned CVG and its companies into socialist companies, and in 2010 CVG workers elected the directors of the respective companies that make up the corporation for the first time.

Ramirez confirmed as president of PDVSA and increased oil production

Today Chavez also announced that the president of PDVSA, as well as the minister of petroleum and mining, Rafael Ramirez, will remain president of PDVSA for the upcoming management period of 2013-2019.

Chavez made the announcement during a meeting in Monagas state with the workers of the Orinoco Oil Belt there. He also outlined plans to increase petroleum production in Venezuela generally to 6 million barrels a day by 2019, said that the government is currently “investing around 5 billion dollars in the belt” and that over the next 6 years the government aims to invest $100 billion.

Ramirez informed that the Venezuelan state has received US$ 383,223 million through petroleum taxes over the last thirteen years. This income was a result of fiscal reforms the government implemented from 2002 in the petroleum sectors. Before those reforms, transnationals in the petroleum sector only payed taxes of 1%, a figure the government increased to 33% in 2002.

Chavez said this money has been invested in education, health, agriculture, and housing.

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