Venezuela's Citgo Announces Half Year Results of Opposition Control
Latin American Herald Tribune
August 29, 2019
HOUSTON -- Six months after the appointment of the Board of Directors of CITGO by the Legitimate Government of the President (E) Juan Guaidó, the company reports to its shareholder this Thursday, August 22, on the great efforts made at this time to recover the stability of CITGO and restore the brightness of other times.
A sample of transparency - as a fundamental principle - that governs the subsidiary of the state oil company in the United States.
Among the results presented in the report and account include:
Financial Stability: Debt Refinancing
In these first six months, the Board of Directors of CITGO has successfully refinanced 70% of its total debts, consolidating the company's financial balance. The debt conditions in the contracts have also been improved, significantly reducing the financial risks and improving the financial forecast of CITGO according to the rating companies.
It should be remembered that six months ago when the new Board of Directors took office, the banks denied access to financial resources, to serve as intermediaries and, therefore, to renew credit lines, generating a liquidity risk in the short term. In this sense, the actions undertaken by the Board in recent months have been key to generating greater confidence in the financial markets, the rating agencies, as well as in the different entities that have commercial relations with the CITGO Entities.
Corporate governance: Selection of the appropriate CEO
The new Board of Directors of CITGO, as soon as they took office, found the company in a very critical situation as a result of the actions of the previous administration in which there was an absence of the Executive President, who dispatched from another country, and an inoperative Board of Directors that was not complying with the minimum principles of professionalism and that compromised the stability of the company.
In its first 6 months leading CITGO, the Board of Directors has endeavored to establish corporate governance to ensure asset protection, financial and operational stability and ensure that practical improvements are being followed.
Among the actions undertaken to achieve this objective are the reactivation of the audit, compensation and marketing committees, and the transparent selection of the new Executive President.
Audits and Investigations: Damage Control
One of the first actions of the CITGO Board of Directors was to request a complete audit of the company and its internal control systems. For this, one of the most respected auditors in the United States was selected after a competitive bidding process. This company was responsible for making the necessary diagnoses with which the Board of Directors is taking the necessary corrections to route CITGO.
Likewise, an exhaustive investigation was ordered to review possible irregularities and acts of corruption within the company committed by past administrations. Thanks to the follow-up of the best practices in these investigations, the financial risk of the company has been reduced and the necessary corrections are being taken to channel the company.
Operational Stability: Search for New Suppliers
Among the achievements of the Board of Directors of CITGO in this semester is the extension of the license that allowed the company to operate until July 2019, making the US Department of the Treasury. . grant a renewable license automatically every month for 18 months.
In this semester CITGO has worked on the substitution of its purchases to Venezuela. These only accounted for 25% of the crude processed by the company, although the supply contract between PDVSA and CITGO Petroleum Corporation is for 310 thousand barrels per day, in 2018 CITGO received only 173 thousand barrels per day.
The marketing committee has also worked in discussions with producers with the most suitable crudes for the CITGO refining system but looking for contracts flexible enough to return to Venezuelan crude once the conditions to do so are given.
The next challenge for the CITGO management team is to re-establish credit lines with oil suppliers to reduce prepaid purchases that increased due to mistrust in the Maduro regime.
Fundación Simón Bolívar: Saving Lives
The license of the Simón Bolívar Foundation, a nonprofit organization funded by CITGO, expired in March which made it difficult to continue treating around 40 patients under the sponsorship of that entity.
The legitimate Board of Directors achieved, after an intense work with the Department of the Treasury, the extension of the license until July 2020, which will allow the Foundation to fully comply with the treatment of all its current patients and at the same time begin to reorient its efforts towards the aid of the humanitarian crisis in Venezuela.