- - Tuesday, February 21, 2012

BUENOS AIRES — Opposition groups in Venezuela are warning that billions of dollars in Chinese loans are driving the state oil company toward bankruptcy.

Miguel Rodriguez, an opposition member of Congress who leaked government memos from the Oil Ministry, predicted that the loans will “end up accelerating the bankruptcy” of Petroleum of Venezuela SA, known by its Spanish acronym, PDVSA.

Oil Minister Rafael Ramirez was so alarmed that he warned President Hugo Chavez that the terms of the loan - which require payment in hundreds of thousands of barrels of oil at cut-rate prices - are creating a “very heavy financial load for PDVSA.”

In a memo addressed to “Comrade President,” Mr. Ramirez said that the loans caused PDVSA to lose $12.5 billion last year.


Mr. Rodriguez told The Washington Times that he is preparing legal action to challenge the loans before Venezuela’s high court.

He said the loans are unconstitutional partly because they violate a national law prohibiting the use of state resources as loan guarantees.

“These are illegal debt mechanisms,” he said.

Mr. Rodriguez said the leaked documents are proof that the loan conditions are bad for PDVSA. He also said that $23 billion of what critics call the “China fund” are unaccounted for.

“The president uses the ‘China fund’ as if it were money in his own pocket,” he said.

Opposition presidential candidate Henrique Capriles, who is slated to face Mr. Chavez in an election in October, has attacked the deals for their lack of accountability.

“Venezuelans have no access to timely, reliable information, and as a consequence, we have no idea how much money is left, how much we owe or the terms under which we have to pay it off,” Mr. Capriles said during a debate in November.

Since 2007, Mr. Chavez’s government has received some $32 billion from China to finance infrastructure construction throughout the country and for oil projects in the Orinoco tar sands, the world’s single largest petroleum reserves, with 513 billion barrels of recoverable heavy crude oil.

In November, Venezuelan Finance Minister Jorge Giordani said Venezuela pays China with nearly 500,000 barrels of oil per day, though some analysts doubt those numbers.

Fueling the Chavez machine

Critics say the Chinese have given Mr. Chavez an untracked source of money that has propped up his political machine.

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