tag:blogger.com,1999:blog-10659894.post110770317959730492..comments2023-08-04T07:57:09.855+00:00Comments on Alek Boyd: Chavez' plan to sale CITGO and the Oxford Institute for Energy StudiesUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-10659894.post-1114614236442309792005-04-27T15:03:00.000+00:002005-04-27T15:03:00.000+00:00Dear Mr Koch,Please read my exchange with Mr Boue ...Dear Mr Koch,<BR/><BR/>Please read my exchange with Mr Boue and pay extra attention to my <BR/>comments regarding the so called unprofitability due to the supply <BR/>contracts between CITGO and PDVSA. The truth of the matter is that Boue, <BR/>currently sitting in the board of PDVSA and CITGO, aren't water tight <BR/>for it's a know fact that refining has indeed turned into a highly <BR/>profitable business.<BR/><BR/>The argument that the internationalization of PDVSA has produced $20 <BR/>billion in losses, otherwise known as diverted taxes and income, over a <BR/>period of 20 years pales when compared to the $60 billion losses of <BR/>PDVSA under Chavez control, which started effectively in 2002.<BR/><BR/>Mr Boue is not fit for the job he's assigned to do for the academic <BR/>flair of his papers doesn't hide his outstanding ignorance on the <BR/>particular subject matter of PDVSA or his political colours. His but a <BR/>pupil of Bernard Mommer, that other pundit who thinks that PDVSA reached <BR/>world class status by mere chance.ABhttps://www.blogger.com/profile/10014152460206926913noreply@blogger.comtag:blogger.com,1999:blog-10659894.post-1114609870733877702005-04-27T13:51:00.000+00:002005-04-27T13:51:00.000+00:00Dear Mr. Boyd,The heart of Mr. J.C. Boué's critiqu...Dear Mr. Boyd,<BR/><BR/>The heart of Mr. J.C. Boué's critique of PdVSA was that CITGO's pre-tax profits have been more or less equal to the discounts at which the parent provides the crude. On a consolidated basis, the net effect is simply to transfer the taxable profit from Venezuela to the USA, benefiting the US Treasury over Venezuela's. Meanwhile, the costs of debt, shipping, and other "services" get charged at the parent company level, further lowering the surplus taxable in Venezuela. He also points out that the compliated offshore structures obfuscate any tax audit. He suggests that, except for this elaborate transfer pricing to reduce taxes paid in Venezuela, CITGO and the rest of the overseas network is unprofitable. <BR/><BR/>See: http://www.pdvsa.com/pdf/publicaciones/public_02.pdf<BR/><BR/>The fact that Boué's consulting firm got paid for the analysis does not in itself refute his analysis. Nor does it invalidate his report to point out coincidences between Boué's views and people sympathetic to Chávez. The only valid complaint would have to be a point-by-point set of counter-proofs, best offered by someone with extensive financial control experience. If you are aware of any, please share.<BR/><BR/>Boué's arguments do not appear ideological. They could also be employed by a free-market libertarian to point out why state-control and efficiency are an oxymoron, that PDVSA's expansion was riddled with inefficiencies, and that the best solution would be divestiture from CITGO and leveling of taxes to reduce fiscal artbitrage.<BR/><BR/>Boué was certainly not asked, and did not address, whether PDVSA's home operations are run well or not. I do not see him recommending PEMEX as a model, either. Few people at PEMEX are happy with its tax and overhead situation.<BR/><BR/>Regards.Anonymousnoreply@blogger.com