The state-owned oil company PDVSA reported recently a record profit increase for Q1 2008, from 1.915 billion to 3.411 billion dollars, or an 80.2% more than the profit for the first quarter 2007.

That was the net profit for PDVSA. The profits before taxes and "social expenditures" (in Venezuela, the oil company is directly and heavily involved in social welfare projects) were 7.464 billion dollars.

Interesting numbers. Now let's imagine that PDVSA belongs to all Venezuelans, as the government pretends, and let's further imagine there's in Venezuela a 5% Flat Tax regime on all venezuelan corporations. Of the US$ 7.464 billion profit, US$ 373.2 million would go to the much more limited state's coffers. Let's say that in shareholder's meeting (which you're a part of as a fractional owner of the company) PDVSA decrees a dividend payment equivalent to 20% of net profits (after taxes), which means a 20% of US$ 7.090 billion. The remaining profits would be retained and used for capital investments, which would help the company increase production, build new refineries or research and develop new alternative energy sources. The total dividend payment to shareholders would then be US$ 1.418 billion.

Now, in our previous imaginary exercise about PDVSA's privatization we had divided PDVSA's capital equally among the 26,127,351 venezuelan inhabitants (as of December 31st 2004), each of them receiving 100 ordinary shares of the company. With those numbers and assuming you kept your shares since 2004, each PDVSA share would have entitled you to a cash payment of 54.3 US¢ or US$ 54.28 for your 100 shares lot, which is equivalent to 189,98 BsF at the parallel exchange rate. On a yearly basis this amounts to some US$ 217,12 or 759.90 BsF in a country where per capita annual income is around US$ 6,000.

Now compare the imaginary situation I just described above with the real current situation. In the private PDVSA scenario each venezuelan would have had around US$ 190 additional income in their pockets as a results of their oil company's profits during the first quarter of 2008.

Instead, in the current Venezuelan reality, it is the government who has almost US$ 8 billions, which allow it to squander money all around, buying wills and loyalties, feeding the parasitic state bureaucracy and corruption and leaving you at the state mercy, having to beg for alms from the arrogant "revolutionaries" in order to get some dough for your "communal council" or an old age pension (which you would not need if the government central bank would not have been inflating to death the Bolivar for 40 years in a row).

Put this in your head: If PDVSA were a private company, that is, belonging to each and every venezuelan, you would not need to beg for government charity anymore. You'd be more independent and, yes, far wealthier than you are.

 Venezuela, Economics