Venezuela moves to nationalize fuel distribution

Other News Materials 28 August 2008 05:32 (UTC +04:00)

President Hugo Chavez said Wednesday that wholesale gasoline sales by private companies in Venezuela will soon disappear after his congressional allies pass a bill nationalizing the business.

Under the measure, which received initial approval in the National Assembly on Wednesday, state-run oil company PDVSA will control Venezuela's fuel distribution network but will not nationalize privately owned gas stations.

The Chavista-dominated National Assembly is expected to give its final OK to the legislation later this week.

Distributors, including subsidiaries of British Petroleum, Exxon Mobil Corp. and Chevron Corp., had hoped to persuade the government not to seize total control of their businesses.

But Chavez ruled out allowing private minority stakes, accusing operators of making an easy buck at the country's expense.

"This was an old scheme through which some private sectors seized the nation's wealth without a drop of sweat," Chavez said. "That's what they defend."

The law gives distributors 60 days to negotiate the sale of their businesses to the government or face expropriation. It also forces distributors to sell storage tanks and gasoline pumps to PDVSA, and to relinquish their brand names.

A PDVSA subsidiary controls 49 percent of fuel distribution in Venezuela, with the rest controlled by private companies, according to industry representatives.

Under Chavez, the government has nationalized Venezuela's largest telephone, electricity, steel and cement companies and has assumed majority control over four major oil projects.

Also Wednesday, the president said in talks with the Mexican ambassador, the government negotiated a deal that will let Venezuelan authorities take full control of Mexican cement company Cemex SAB's local plants.

He gave no details on what his government might pay for a majority stake in Cemex's three Venezuelan cement plants, 30 smaller concrete plants and shipping terminals.

Venezuela seized the facilities on Aug. 19 after compensation talks failed.

Jorge Perez, a spokesman at Cemex headquarters in Monterrey, Mexico, confirmed the agreement with Venezuela but said compensation must still be determined in talks with the government.

Chavez also said that "time has run out" for an agreement on compensating the country's largest steelmaker, Sidor, and that Venezuela will determine on its own what parent company's Ternium SA's shares in the company are worth.

Ternium is a subsidiary of Argentine-Italian conglomerate Techint. It owned 60 percent of Sidor until it was nationalized in May.

Chavez added that the two sides disagree over a Ternium request that the government guarantee immunity from future claims by workers or others in Venezuela.

Ternium officials were not available, AP reported.