Venezuela tightens grip on fuel stations after subsidy reform

Cars are parked in line near a gas station with subsidized fuel in Caracas. (Reuters)
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Updated 29 June 2020

Venezuela tightens grip on fuel stations after subsidy reform

  • Removal of licenses will likely allow the state to take the benefit of higher pump prices

CARACAS: Venezuelan state oil firm PDVSA has told independent gas station operators it can revoke their licenses “at any time,” only weeks after it cut generous fuel subsidies and as widespread shortages take hold, a notification PDVSA sent to the operators showed.

PDVSA has a monopoly over the wholesale fuel distribution market and owns almost all of the country’s 1,200 service stations, although most are operated by private companies through commercial licenses.

Many are suffering the effects of years of price freezes that prevented fuel sales income from keeping up with the costs of maintaining their stations.

The industry had hoped the subsidy reforms and resulting price rises could revive their businesses, but the removal of licenses could allow the state to take the benefit of higher pump prices.

The notification document says PDVSA “will be able to rescind the contract unilaterally and at any time.” A person familiar with the process, who asked not to be named, said so far 12 gas stations in Caracas had received the notification.

The shift is a new sign of the desperation of President Nicolas Maduro’s government for hard currency as the COVID-19 pandemic and US sanctions have reduced Venezuela’s capacity to earn export revenue from
oil shipments.


Lee’s death sparks hope for Samsung shake-up, dividends

Updated 26 October 2020

Lee’s death sparks hope for Samsung shake-up, dividends

  • Shares in the company and affiliates rise; around $9bn in tax estimated for stockholdings alone

SEOUL: Shares in Samsung Electronics Co. Ltd. and affiliates rose on Monday after the death a day earlier of Chairman Lee Kun-hee sparked hopes for stake sales, higher dividends and long-awaited restructuring, analysts said.

Investors are betting that the imperatives of maintaining Lee family control and paying inheritance tax — estimated at about 10 trillion won ($8.9 billion) for listed stockholdings alone — will be the catalyst for change, although analysts are divided on what form that change will take.

Shares in Samsung C&T and Samsung Life Insurance closed up 13.5 percent at a two-month high and 3.8 percent, respectively, while shares in Samsung SDS also rose. Samsung Electronics — the jewel in the group’s crown — finished 0.3 percent higher.

Son and heir apparent Jay Y. Lee has a 17.3 percent stake in Samsung C&T, the de facto holding firm, while the late Lee was the top shareholder of Samsung Life with 20.76 percent stake.

“The inheritance tax is outrageous, so family members might have no choice but to sell stakes in some non-core firms” such as Samsung Life, said NH Investment Securities analyst Kim Dong-yang.

“It may be likely for Samsung C&T to consider increasing dividends for the family to cover such a high inheritance tax,” KB Securities analyst Jeong Dong-ik said. Lee, 78, died on Sunday, six years after he was hospitalized due to heart attack in 2014. Since then, Samsung carried out a flurry of stake sales and restructuring to streamline the sprawling conglomerate and cement the junior Lee’s control.

Investors have long anticipated a further shake-up in the event of Lee’s death, hoping for gains from restructuring to strengthen de facto holding company Samsung C&T’s control of Samsung Electronics, such as Samsung C&T buying an affiliate’s stake in the tech giant.

“At this point, it is difficult to expect when Samsung Group will kick off with a restructuring process as Jay Y. Lee is still facing trials, making it difficult for the group’s management to begin organizational changes,” Jeong said.

Lee is in two trials for suspected accounting fraud and stock price manipulation, as well as for his role in a bribery scandal that triggered the impeachment of former South Korean President Park Geun-hye. The second trial resumed hearings on Monday.

Lee did not attend the trial on Monday, as Samsung executives joined other business and political leaders for the second day of funeral services for his father.