Environmental Technologies Industries
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Market Plans

Venezuela Environmental Export Market Plan
Executive Summary

Prospects for U.S. exports of environmental technologies to Venezuela are improving as the Venezuelan
economy continues to show strong growth. The Venezuelan economy is expected to have grown between 5 and 6 percent in 1997, and this growth should continue through 1998. Inflation is expected to have fallen from its 100 percent level in 1996 to about 40 percent for 1997. Venezuela's economic recovery and privatization efforts are attracting significant foreign investment.

The country's economic dependency on oil and oil product revenues resulted in a period of stagnant
growth in the early 1990s when petroleum prices decreased. Environmental technology imports were particularly hard hit by the economic downturn. The economic recovery that gained momentum in 1997 is reversing this trend, making 1998 an opportune time for U.S. environmental companies to enter the Venezuelan market.

It is estimated that the market for environmental technologies will reach $400 million in 1998. U.S. environmental technologies are widely accepted and easily adapted in Venezuela. U.S. environmental
technology imports represent over 60 percent of the total environmental import market. Imports are expected to remain strong, as domestic production capacity is low in all environmental subsectors, representing only 12 percent of the total market.

Of all environmental subsectors, water supply and wastewater treatment represent the best opportunities
for U.S. firms. Water sector decentralization, and government efforts to improve municipal water supply systems, sewage networks, and wastewater treatment plants will require upwards of $1 billion in new investments. Projects generated from these initiatives will open a wide range of opportunities for U.S. companies–from feasibility assessments and financial services to equipment sales and construction services.

Commercial and industrial recycling of paper, glass, metals, and plastics is a well-established
business and presents continuing opportunities for U.S. companies. Municipal recycling and landfill

upgrade and construction have not been a major priority of the federal government to date. These projects are the responsibility of local governments, which currently lack the resources to make major investments.

A new regulatory framework for hazardous waste will open important new opportunities for U.S.
companies in the areas of hazardous materials recycling and recovery in the short to medium term.
Furthermore, the government is interested in promoting development of an independently owned
and operated hazardous waste recycling and disposal facility.

Short-term opportunities in the air pollution control sector exist for monitoring and industrial emission
control equipment. In the medium term, a sizable market for catalytic converters will develop due to the expected introduction of unleaded fuel for cars and trucks in 1999.

There is a modest yet growing demand for environmental consulting and engineering services, such as feasibility studies and environmental impact assessments. Much of this demand is being generated by the expansion of state oil facilities, as well as by the projects sponsored by the U.S. Trade and Development Agency (TDA). New hazardous waste regulations are also generating a market among major industrial companies for analyzing and assessing future treatment and storage options. Opportunities for operations and management contracts are limited in Venezuela in the solid waste, water, and wastewater subsectors.

The Venezuelan Government, through the Ministry of the Environment and Renewable Natural Resources (MARNR) and aided by the World Bank and Inter-American Development Bank (IDB), is promoting a package of ambitious institutional, legal, and regulatory framework strengthening projects in the environmental sector. This well-funded effort will provide direct consulting opportunities for U.S. companies to aid the government in strengthening its institutional capacity. A key component of the package is enforcement of the regulations. Regulation enforcement is critical to propelling private sector demand for environmental equipment and services.

Petroleos de Venezuela (PDVSA), the state-owned oil company, offers great opportunities for the sale of environmental equipment and services. The company is currently undergoing the biggest expansion in its history, spurred by new regulations that have opened up the oil sector to private and foreign participation. Major projects and equipment purchases will take place in 1998.

Concurrent with its overall expansion plan, PDVSA is implementing an environmental management program called Environment, Sanitation, and Safety for all its subsidiaries. The plan, based on ISO 14000, is an integrated system that was implemented previously in three PDVSA subsidiaries: LAGOVEN, MARAVEN, and CORPOVEN. PDVSA expects to receive ISO 14000 certification in 1998.

The Corporación Venezolana de Guayana (CVG) also presents important opportunities for U.S. environmental suppliers. CVG is a major government mining and metal processing conglomerate,
soon to be privatized. Among the company's holdings to be privatized in 1998 is a large industrial
park located in the southern Guayana region. The park is composed of aluminum, iron, and steel
companies. The new owners of the park will be responsible for the environmental liabilities of
these companies. Therefore, they will need to implement an aggressive environmental program.

Venezuela's recent economic and financial difficulties greatly limit the level of domestic financing
available to the Venezuelan public and private sectors. U.S. suppliers should consider their buyers’
needs for credit, albeit with caution, given Venezuela's recent currency controls and intervention
in the banking system. U.S. exporters will often find it very useful to seek the assistance of
U.S. Government export finance programs.

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