![]() The most common vehicles to implement the swaps were Venezuelan public debt instruments denominated in Bolivars (DPNs), U.S. Said operations were commonly structured through the swap of securities or the straight forward sale in one currency of securities denominated in another. Financial transactions were available that structured aĭe factoparallel market. In February 2003, the CADIVI regime (i) centralized in the Venezuelan Central Bank the purchase and sale of foreign currency in Venezuela, (ii) established the official rate of exchange, and (iii) only allowed the sale by the Venezuelan Central Bank of US dollars at the official exchange rate for the payment of certain types of obligations (imports of products qualified as of basic necessities, and requirements for certificates evidencing the non-production of goods in Venezuela).īecause of the limitations imposed on the purchase of foreign currency at the official exchange rate through CADIVI, alternative mechanisms were developed to allow companies to obtain foreign currency for their operations. It is important to understand that foreign exchange controls have been in place in Venezuela for ten years. For all other purposes, however, such suppliers of goods and services are subject to the CADIVI Regime. In view of the foregoing, oil field services contractors and other suppliers of goods and services to the Venezuelan oil and gas sector could receive payments in foreign currency if they could prove that such goods and services fall within the scope of foreign component. The maintenance expenses of the above mentioned goods and the services required for the development of the operations of the contracting entity will also be considered part of the foreign component when foreign knowledge, technology, and advice (not available in Venezuela) is required. 9 defines the foreign component of contracts as the value of goods and spare parts included in the structure of costs that are transferred in ownership or use to the contracting entity, provided that these are not manufactured in Venezuela and are necessary for the development of the operations of such companies. PDVSA is allowed to make payments in foreign currency to its contractors and creditors only with respect to the foreign component of said contracts.Įxchange Agreement No. 9 and as a majority shareholder of allĮmpresas Mixtas has imposed such restrictions on them. PDVSA as a contracting entity has certain limitations pursuant to Exchange Agreement No. 9 allows Empresas Mixtas to maintain proceeds from their operations in offshore accounts in foreign currency to pay their contractors to the extent applicable. 9 specifically excluding them from the CADIVI regime. Upstream oil and gas joint ventures (Įmpresas Mixtas) and Petrleos de Venezuela, S.A (PDVSA), are regulated by Exchange Agreement No. This step, at a time when the black market rate is approximately four times the official exchange rate, seems to be necessary in order to control inflation and grant companies access to foreign currency.Ĭompanies involved in upstream oil and gas activities in Venezuela are not directly subject to the CADIVI Regime. Sistema Complementario de Administracion de Divisas or SICAD) to address the purchase of foreign currency by importers operating in Venezuela who do not have access to the Commission for the Administration of Foreign Currency (Ĭomision de Administracion de Divisas or CADIVI). In February 2013, after devaluating the official exchange rate of the Venezuelan Bolivar from VEB 4.3 to 6.3 per USD, the Venezuelan government set up the Complementary System of Administration of Foreign Currency ( Special Purpose Acquisition Companies (SPACs). ![]() Environmental, Social and Governance (ESG).Automotive, Transportation and Mobility.International Arbitration and Litigation.Appellate, Constitutional and Administrative Law.Special Matters and Government Investigations.National Security and Corporate Espionage.Middle East and Islamic Finance and Investment.Employee Benefits and Executive Compensation.
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