PDVSA’s tugs: The joys of opacity

Gustavo Coronel points us to the scheduled shipment of 42 (!) tugs from Singapore to Venezuela. As someone who has researched the contracts behind the dearly departed Aban Pearl drill ship and its successor, the PetroSaudi Discoverer, Coronel wanted to know about who was the owner of these ships. He asks:

If PDVSA isn’t the owner of these 42 tugs, who else could be? And if they are, how are they going to pay for these machines? What are they going to be used for? Why so much mystery? Is it another example of a soup [scam], a la Aban Pearl?

Of course it’s no surprise that people are confused by such a situation. And he’s right to be suspicious that there may be something scammy going on. I know that the government and its defenders don’t like people picking on PDVSA or Venezuela generally, as much of the world is equally opaque in its government contracting and procurement. But what’s sad about this situation is that the Chavez government came in on a promise of transparency. The 1999 constitution guarantees access to information. And yet Venezuelans are now accustomed to knowing nothing about how the government works. It’s similar to the US, but with even less accountability.

To blow people’s minds in both Venezuela and the US, I have been pointing them recently to the story of the “puente mecano” over the Biobio River, in Chile. Now, I think regular readers know that I am suspicious of Chile, and especially of its impeccable reputation. That said, allow me to add to the myth.

At the end of this month, President Sebastian Piñera will inaugurate a new mile-long bridge over the Biobio River, the temporary replacement for a structure that shattered and collapsed in the February 2010 earthquake. The bridge, the longest campaign bridge ever, was bought by the defense ministry for $16 million from US-based Acrow Corp. That tidbit of information, which was easy enough to come by, made a big difference in the country’s politics.

UK-based Mabey Bridge Ltd. complained, saying it could have provided the bridge for $1.3 million less. The government’s Transparency Commission said the bridge purchase violated principles of efficiency. There was a lot of back and forth and complaints about what information was or wasn’t given to the commission. The defense minister eventually lost his temper, saying before a live mic that the bridge “vale callampa, huevón.” The polite translation is that it “wasn’t worth squat, dude.”

“Vale callampa” became a running joke to refer to things that cost too much. Eventually, the combination of scandal and spin failure became too much for the president, and the defense minister resigned. Over an alleged $1.3 million overpayment. The defense minister. In Latin America. Worth thinking about.

6 thoughts on “PDVSA’s tugs: The joys of opacity

  1. etudiant

    Have to say that the defense minister was in the right on this one and it is too bad he got the chop.
    The bridge got built with reasonable speed and the price, less than 10% over the competing bid, if competition there was, seems in line, even cheap for a mile long bridge.
    If this contract had gone the usual route of tender and multiple bidders, with political influence always present, the cost would have been double or more and the bridge would still not be ready.

  2. Marcus Anonymous

    etudiant is absolutely right. After a disaster, you have to be fast, even if you are slightly less efficient or conscious of costs. There isn’t time for all the bureaucratic safeguards and paperwork. Then you may find that you could have done it cheaper. But that wasn’t the issue — speed was the issue.

    After hurricane Katrina destroyed New Orleans, everybody complained that the government wasn’t giving out assistances as fast as needed. The relief workers we told not to be such sticklers for procedure. A long time afterwards, there were complaints that the relief efforts were riddled with fraud. Well, that’s why — They did it fast instead of carefully and fraud is the price you pay.

    After a disaster, you can’t always have it both ways.

  3. sapitosetty Post author

    OK, all fair points. I used a bad example. I am sure there was a lot of BS in the firing of the defense minister. My point was just that it is possible to be transparent. PDVSA has no excuse. I suppose I could have just written a very short blog post…

      1. Edgar

        These tugs were bought by Brumby Shipholding SA (Panama). All tugs bought at very low price n sold to PDVSA with 100+ million Euro markup. Should learn from Brumby how to make money…. With his Euro 100 million, PDVSA could buy 80 more tugs including transportation.

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