Viewing cable 09CARACAS1181, THE CUBANS IN VENEZUELA'S PORTS

 

Reference ID	Created	Released	Classification	Origin
09CARACAS1181	2009-09-09 12:12	2010-11-30 21:09	CONFIDENTIAL	Embassy Caracas

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DE RUEHCV #1181/01 2521224
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FM AMEMBASSY CARACAS
TO RUEKJCS/SECDEF WASHDC
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
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RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY
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C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001181 

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NSC FOR LROSSELLO 
TREASURY FOR MKACZMAREK 
USDOC FOR 4332 MAC/ITA/WH/JLAO 
HQ SOUTHCOM ALSO FOR POLAD 

E.O. 12958: DECL: 09/01/2019 
TAGS: ECON PGOV ETRD EINV MARR CU VE
SUBJECT: THE CUBANS IN VENEZUELA'S PORTS 

REF: CARACAS 1022 AND PREVIOUS 

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Classified By: Economic Counselor Darnall Steuart for reasons 1.4 (b) a 
nd (d) 

¶1. (C) SUMMARY. Post has comfirmed that a wholly Venezuelan 
government-owned company, Bolipuertos, is now charged with 
the management of Venezuela's ports. Cuba's ASPORT has a 49 
percent share in Puertos del Alba, a separate company, which 
will reportedly be focused on business development. Contacts 
in shipping circles, however, tell us that the Cubans are 
active in the ports as "advisors" to Bolipuertos and were 
instrumental in pushing for the take over of port operations. 
Bolipuertos has taken over private warehouse operations at 
three ports named in the original March 25 Decree (Guamache, 
Maracaibo, Puerto Cabello) as well as a fourth -- La Guaira, 
the port serving Caracas. Shipping contacts report rumors 
that the government may nationalize stevedoring and customs 
agent services. Insurance premiums have reportedly increased 
35-40 percent since May. END SUMMARY. 

BOLIPUERTOS & PUERTOS DEL ALBA 
------------------------------ 

¶2. (SBU) Post has clarified the issue of the management of 
Venezuela's ports. Two companies of virtually the same name 
have been decreed by the Government of the Bolivarian 
Republic of Venezuela (GBRV). The first -- Bolivariana de 
Puertos S.A. (BPSA or Bolipuertos) -- was founded by Decree 
on June 12, 2007. This company was to be a mixed 
Venezuelan-Cuban company with Cuba's Grupo Empresarial de la 
Industria Portuaria (ASPORT) having a 49 percent share. We 
understand that this first Bolipuertos was never actually 
registered as a company. The second Bolivariana de Puertos 
(BP or Bolipuertos) was created by Decree No. 6,645 dated 
March 25, 2009, to "maintain, administer and develop" 
Venezuela's ports. According to that Decree, the Venezuelan 
state holds 100 percent of the capital of the second 
Bolipuertos which was assigned to the Ministry for Public 
Works and Housing. Neither of these companies is Puertos del 
Alba in which the Cubans have a significant investment. 

¶3. (C) On July 29, 2009, as reported reftel, the GBRV 
published another Decree in the National Gazette authorizing 
the creation of Puertos del Alba, a state-owned company to be 
charged with "modernizing, renovating, equipping, and 
constructing" ports in Venezuela and Cuba. Cuba's ASPORT has 
a 49 percent share in Puertos del Alba with the 51 percent 
majority share remaining with Bolipuertos. A close Embassy 
contact tells us that the intent of the GBRV is to "follow 
the Cuban model" by installing a company (Bolipuertos) that 
will run all aspects of port operations in Venezuela while 
Puertos del Alba will act as its business development arm. 
Other contacts assert that Bolipuertos retains Cuban 
"advisors" on staff, but they do not believe that the Cubans 
have formal managerial responsibility in the company. These 
advisors, however, are believed to have urged the GBRV to 
move ahead with taking control of the ports. 

¶4. (C) The March 25, 2009, Decree creating (or re-creating) 
Bolipuertos stipulated that it would be responsible for the 
infrastructure of Puerto El Guamache (the Isla Marguerita 
cruise ship port), Maracaibo Port, Puerto Cabello 
(Venezuela's largest port), as well as that of "any ports to 
be developed in the future." As reported reftels, a 
subsequent Decree dated July 30, declared the immediate 
nationalization of private warehouse operations at the three 
ports named in the March 25 Decree as well as a fourth -- La 
Guaira, the port serving Caracas. Our contacts in the 
shipping industry tell us that it appears likely that 
Bolipuertos will also take control of port operations at 
Guanta, Palua/Puerto Ordaz, Guiria and Cumana. 

PORT SERVICES STILL TROUBLED 
---------------------------- 

¶5. (C) Operations in Puerto Cabello were interrupted for 
four days following the take over of warehouse operations at 
the beginning of August. Reports of significant problems 
have continued since the resumption of operations. Former 
Petroleum Chamber President Andres Duarte (protect 
throughout) informed Econoffs that his stevedore company has 
not been allowed to remove equipment from the port for 
maintenance or weekend storage in what many believe is a 

CARACAS 00001181 002.2 OF 002 


precursor to the expropriation of stevedoring and other 
terminal services. Another contact whose company provided 
warehouse services at Puerto Cabello, directed Econoffs' 
attention to another company, Venezolana de Exportaciones y 
Importaciones, C.A. (VEXINCA), established by Decree No. 
38954 dated June 17, 2008. According to this contact, 
VEXINCA, which is run by the military as are the ports at 
this point, is actively offering customs services to the 
clients of private sector customs agents. Our contact 
speculates that VEXINCA may eventually be designated as the 
sole provider of customs services in Venezuela. 

INSURANCE AND OTHER RISKS 
------------------------- 

¶6. (C) Duarte informed Econoffs that insurance premiums have 
increased 35-40 percent since the May 2009 announcement of 
the Marine Committee of the Lloyd's Market Association that 
it had withdrawn maritime war-risk policy coverage for 
Venezuela. Other local shipping contacts have confirmed a 
bulletin that ran in a British shipping magazine in August 
noting that it may be difficult to make claims against 
Bolipuertos for robbery, damage etc. According to Duarte, 
Norweigan and Panamanian owned ships that used to bring soda 
ash to Venezuela have already been swapped out for older 
vessels with much smaller cargo capacity that cannot maintain 
the previous off-loading rate of 50,000 tons per day. Duarte 
also confirmed that the GBRV will have to pay a higher 
premium on refrigerated shipping containers to European and 
Brazilian firms as Maersk will no longer send them to 
Venezuela as it has been unable to retrieve them in the past 
due to the chaos in the ports. It has also been reported that 
shipping line Hamburg Sud will no longer serve Venezuela. 
¶7. (C) COMMENT: Many observers note that decreased traffic 
arising from the global recession has saved Venezuela's ports 
from complete strangulation. The wilderness of stacked 
containers at the ports has improved. However, few here 
believe that the GBRV has the know-how or the logistical 
experience to manage the ports even with the assistance of 
Cuban advisors. There is speculation that some port 
operations may ultimately be handed over to friendly 
governments on a concessionary basis. 
DUDDY