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US companies could be hardest hit by Venezuela nationalizations
By Guy Jackson
AFP
CARACAS
Petroleumworld.com 01 10 07Plans by Venezuela's firebrand President Hugo Chavez to nationalize the country's power and telecoms companies could hit US businesses hardest, as they have large stakes in the profitable sectors.
Chavez, flush from securing another six-year term at the country's helm, said Monday he would ask the legislature to approve the "mother of all revolutionary laws" allowing him to nationalize the power and telephone sectors.
The proposed legislation would also allow Chavez to end foreign control of refineries of heavy crude from the Orinoco region in the east, where he maintained "international companies control and dominate the refining processes of heavy crude."
Venezuela, which produces mostly heavy crude, relies on foreign companies, mainly from the United States, to refine much of its oil.
The main power company is state-owned Cadafe. But the main operator in the capital Caracas is the private company Electricidad de Caracas, owned by US based AES, which has a million customers, mostly households.
In land-line and cellular telecoms services, CANTV leads the pack in Venezuela. Its main shareholder is US Verizon Communications with a 28.5 percent stake.
CANTV, set up as a private company in 1930, was nationalized in 1950. In 1991 it was reprivatized.
Neither Electricidad de Caracas nor CANTV immediately reacted to Chavez's announcement, but in New York, CANTV shares shed a quarter of their value Tuesday in early trading falling to 12.51 dollars at 1600 GMT.
The United States has slammed Chavez's announcement saying that existing contracts should be honored and warning the Venezuelan people would not benefit from the move.
Chavez said he would also seek a constitutional reform to strip the central bank of its autonomy, an idea dismissed by one of the bank's directors Domingo Maza Zabala."To carry out its duties, the central bank needs to be autonomous. The central bank's main function is to maintain the currency's value .. and regulate monetary liquidity," Maza Zabala argued on Globovision TV.
"Autonomy is not the same as complete independence because the central bank is an organ of the Venezuelan state ... so it is autonomous within the purview of the state," he added.
AFP 09 1851 GMT 01 07
Copyright© 2001 AFP.All Rights Reserved.
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