Since 2007 Venezuela has provided Nicaragua with subsidized oil, allowing the impoverished country to raise funds for development projects. But the agreement has also created lucrative business opportunities for President Daniel Ortega and his family, according to an in-depth investigation by Nicaragua's Confidencial and Venezuela's Armando.
Through Venezuela's Petrocaribe program, Nicaragua receives 10 million barrels of subsidized oil from Caracas. Fifty percent of the cost must be repaid in 90 days, while the other half is a long term loan to Nicaragua to finance infrastructure and social spending.
Albanisa (Alba de Nicaragua, S.A.) was created in 2007 to manage the Venezuelan oil shipments. It was constituted as a private company in order to circumvent congressional oversight of how it spends the development funds, according to the investigation.
Albanisa dominates several key industries in Nicaragua, according to the report, including gas sales and generation and distribution of electricity. It's a key player in food exports to Venezuela, a major client of Nicaraguan producers. Authors Octavio Enríquez, Iván Olivares, and César Bátiz allege that in the past eight years the Ortega administration has privatized $3,047 million coming from Venezuela, from a total of $3,423 million in state cooperation (which includes funds from the Venezuelan Development Bank, Bandes). They say the Venezuelan administration is complicit in this cooptation.
Since 2010, just over 60 percent of the Venezuelan oil funds are used for investment in private enterprise. An average of $302 million per year were invested into for-profit enterprises between 2010 and 2014, according to one of the report's sources. The remaining $155 million were destined to social projects according to the government, but are called "cuasi-fiscal operations" by the IMF.
Venezuelan Pdevesa holds just over half of Albanisa's stock. The government is represented on the board by former president Hugo Chavez's cousin and the current Minister of Oil.
The report details loans tendered to Ortega family memebers in order to purchase a three star hotel in Managua and develop a cattle raising enterprise. Over $10 million were used to purchase two television channels, which are run by Ortega's offspring, according to the report.
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