Venezuela plans to compensate investors of assets returned to state control
CARACAS: Venezuela will compensate companies in the telecommunications, oil and power industries that may be subject to the nationalization plan of President Hugo Chбvez, who was sworn in to another term Wednesday, the head of the National Assembly Finance Committee said Wednesday.
“Confiscation, expropriation are banned words in our dictionary,” Ricardo Sanguino, the committee chairman and a deputy who is a member of the Chбvez coalition, said by telephone. “We will be tough but fair negotiators. There are legal mechanisms in the constitution that give support to our plan.”
Meanwhile, the Venezuelan finance minister, Rodrigo Cabezas, said Caracas was studying how it would go about nationalizing major utilities.
The Venezuelan stock market rebounded this week from its biggest decline. Flashbacks of past nationalizations during another turbulent era in places like Cuba and Chile helped drive down the main index on the Caracas exchange almost 19 percent Tuesday.
The Caracas index rose 5.5 percent, while U.S. shares of Nacional Telйfonos de Venezuela, which Chбvez planned to nationalize, gained 19 percent after declining 30 percent in two days.
The nationalization plan involves taking control of foreign oil ventures in the Orinoco Belt of Venezuela by buying out their stakes, not through expropriation, Sanguino said. Another option would be paying companies for the value of their stakes after deducting taxes or unpaid licensing rights, he said.
Companies with investments in the basin include U.S. companies like Exxon Mobil, Chevron and ConocoPhillips as well as BP of Britain, Total of France and Statoil of Norway.
The plan is the biggest step by Chбvez toward reversing the legacy of previous governments that raised $5 billion from the sale of companies and opened Venezuelan markets to foreign investors. Chбvez said last month that industries he deemed strategic to national interests, like electricity and communications, would be returned to state control.
Chбvez pledged to spend his second, six-year term in office implementing socialism.
“Building Venezuela’s way to socialism, that’s the only way to redemption,” Chбvez told lawmakers gathered for his inauguration at the National Assembly.
Under the plan, the government will compensate shareholders of companies like Nacional Telйfonos, for reversing its sale to foreign investors several years ago, Sanguino said.
The president’s plan is exclusively about reversing such sales, not taking over companies owned by private investors like the biggest Venezuelan electricity distributor, Electricidad de Caracas, Sanguino said.
“Venezuela isn’t a newcomer in this nationalization business,” Sanguino said, referring to the process of nationalization spearheaded by the then-President Carlos Andrйs Perez in the 1970s. “We know how to implement. It will be good for our country.”
Telйfonos de Mйxico, which had an agreement to buy Cantv, said it was resigned to the probability of having to cancel the deal.
Sanguino said that he expected Chбvez to introduce legislation requesting extraordinary powers to make law by way of executive order next week. Passage of the legislation, which would grant the president authority to nationalize utilities and oil ventures with foreign companies and scrap the autonomy of the central bank, would not take more than two weeks, Sanguino said.
