ONGC Videsh led Indian consortium to raise its investment in Venezuela to US$ 3 billion
Shri Jyotiraditya M. Scindia, Minister of State for Commerce and Industry, has conveyed to the Venezuelan leaders India‘s desire to deepen and diversify economic cooperation between the two countries. Leading an official and business delegation, Shri Scindia met Mr. David Velasquez, Vice Minister for Foreign Affair, Venezuela. The two leaders reviewed the bilateral relations and expressed satisfaction over the growth in bilateral trade which has grown 12 times during the last four years.
However, the Indian Minister emphasised the need to expand the trade basket as the current trade is dominated by petroleum imports from Venezuela. Mentioning that Venezuelan President Hugo Chavez’s visit to India in the year 2005 has been successful in creating a strong bond between India and Venezuela, it is now time to translate cultural commonalities between the two countries into a strong economic bond.
Shri Scindia identified healthcare, information technology, energy, mining, textiles and auto sector as having the maximum potential for increased cooperation. In particular, he stressed that the Indian Pharma companies can help the Venezuelan Government in its health Mission plan by supplying required critical drugs at an affordable price. He also requested the Venezuelan Minister to address the issues of the Indian companies operating in Venezuela in energy and IT sector to promote more investments by Indian companies.
Shri Scindia also held bilateral level talks with Ms. Maria Eugenia Castellanos Sader, Minister for Health of the Bolivarian Republic of Venezuela and offered India’s assistance and cooperation in the healthcare sector. While assuring the Venezuelan Minister of supply of quality drugs by Indian companies at affordable prices, he also offered Indian expertise in creating health infrastructure. Currently Venezuela imports medicines worth US$ one billion annually. However India’s share in this is less than seven percent. He offered help to Venezuela in three specific fields in the pharma sector: supplying medicines for the social needs of people, creating infrastructure in health sector; and joint-research in the area of pharmaceuticals.
Shri Scindia requested the Venezulan Minister to fast track the drug registration process to facilitate trade and investment by Indian pharma companies. It was also felt that in the proposed draft agreement for cooperation in health sector between the two countries pending with the Venezuelan Government, could incorporate specific clauses covering sourcing of pharma products from Indian companies, addressing the issue of delayed payments and creation of health infrastructure in Venezuela by Indian companies. Shri Scindia mentioned that as suggested by President Chavez, we can have a bi-national fund for pharma and oil to inter-alia enable timely payments.
Shri Scindia also met Ms. Edmee Betancourt, the Minister of Commerce, Venezuela and reviewed the overall bilateral trade relations. The relationship is in true sense a complementary relationship as India’s energy deficit can be tackled by Venezuela, which in turn needs India’s help in manufacturing and engineering sectors. Shri Scindia also stressed the need to expedite finalisation of the Double Taxation Avoidance Agreement (DTAA) between India and Venezuela. For enhanced relationship in the energy sector, Shri Scindia mentioned that Indian public sector oil companies want to enter into agreements on a spot basis. ONGC Videsh has already invested $ 350 million and intends to invest additional $500 million in the San Cristobel oil field. In addition, ONGC Videsh with an Indian consortium proposes to invest US$ 2.2 billion in the Carobobo project. GAIL would like to explore opportunities in the natural gas value chain. BPCL is keen to explore opportunities to export base oil to Venezuela and its marketing. Engineers India Limited (EIL) would like to provide its design and engineering services in the hydrocarbon sector.
Shri Scindia mentioned that President Chavez has suggested a clear blueprint for this partnership: building a refinery in Venezuela in joint venture with a Venezuelan majority stake; building shipping lines between India and Venezuela; and building a joint venture refinery in India with a Indian majority stake. Based on this blueprint, the Indian Government has forwarded a proposal to Venezuela to participate in a refinery joint venture project in Odhisa with the Indian Oil Corporation.
Some of the other issues which were brought to the attention of the Minister were the nationalisation of oil rigs, foreign exchange regulation restriction and policy of state to decide the rent. Delay in issue of business visa for Indian businessmen and restrictive foreign exchange regulations were also cited as impediments in the bilateral economic relation. The Venezulan Commerce Minister assured that the Venezuela will look into these issues. The Venezuelan side was also requested to suggest date for convening the second meeting of the India – Venezuela Joint Commission Meeting.
Shri Scindia also mentioned that a letter of intent was signed in the year 2005 between IRCON and IAFE (railway authority of Venezuela) to execute a railway project Punto Fijo-Yaracal in Falcon State of Venezuela. However this has been stalled due to lack of funds. Suggesting that India has wealth of experience in this field, Shri Scindia suggested revival of the proposal. Earlier, Shri Scindia attended a meeting in the Hydrocorbon Association of Venezuela during which he expressed India’s desire in participating in Venezuela’s petroleum sector, exploration, production as well as refining.
During a bilateral meeting with the Vice Minister and Vice President of PDVSA Mr. Evlogio del Pino, Shri Scindia reiterated India’s desire to cooperate in the E&P, refining and marketing; creation of infrastructure in the hydrocarbon sector through the Indian public sector companies like GAIL, BPCL, OVL and EIL. Regarding the delayed payment of dividends, he asserted that payment of dividend to OVL for the year 2009 should precede further investment of $500 million in the San Cristobal field.