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Lid blows off at PDVSA

By Veneconomy

04.05.05 | On Tuesday, El Nacional announced that some 12,000 workers were apparently to be dismissed from PDVSA Occidente. That same afternoon, the Minister of Energy and Oil and President of PDVSA, Rafael Ramírez, denied the report, pointing out that the workers who were being removed were those whose contracts were about to expire and were not going to be renewed. However, sources contacted by VenEconomy claim that the report given in El Nacional is nearer the truth than the version offered by Minister-President Ramírez.

It turns out that the workers who were laid off were on an additional payroll, separate from PDVSA’s regular payroll and from the payroll of workers hired by service companies. These workers were hired on the eve of the recall referendum in 2004 to perform services in tertiary areas and for political reasons. According to a claim made by the company Leomosca in an open letter to President Chávez, not only had the number of workers on this payroll reached unprecedented levels but also the hiring process was riddled with corruption. This report by Leomosca contributed to the dismissal last week of some 40 pro-government managers who had taken part in the government’s emergency plan to lift the oil strike at the beginning of 2003.

Now there is a second part to this story, a claim by Deputy Julio Montoya also in connection with the exaggeratedly large contracted worker payroll and excessive levels of corruption in the hiring process. According to VenEconomy’s sources, because of fears that further investigations would turn out to be inconvenient for the government, management opted for making a fresh start, and the decision was taken to get rid of all the workers on the payroll questioned by Leomosca and Montoya. The problem with this decision is that these workers are covered by the Labor Law and the firing freeze. That is where things are getting complicated, because it so happens that the workers that have been laid off are supporters of the revolutionary process and have the support of Fedepetrol, a situation that could generate static for the government.

Another side to this story is PDVSA’s patently low level of production, the result of inexperience and poor management. Even President Chávez himself has admitted that it is not even sufficient to meet the OPEC quota. The government wants to increase production at all costs and to improve operations in order to be able to meet a possible increase in the OPEC quota. It looks as though it is beginning to see that its strategy of eliminating the meritocracy, rather than bringing benefits to the industry, has damaged it. There are those who think that PDVSA management will take advantage of these dismissals to start rehiring former PDVSA workers. The plan would be to select people from a group of former workers who have been petitioning management to rehire them for more than a year, the majority of whom did not apparently sign in favor of the recall referendum, on the one hand, and, on the other, it is rumored that the oil company’s management is encouraging the creation of partnerships between totally Venezuelan private companies with a view to reactivating wells that are currently paralyzed, and it is calling on companies to submit proposals with this in mind. It looks as though lid is about to be blown off at PDVSA. What can still be rescued after all these years of inexperience, poor management, and corruption? And what will be the cost?



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