Nationalizations performed in 2008 remain unpaid

Though agreements have been reached with cement companies Lafarge and Holcim, the government has yet to provide the funds accorded. In the meantime, Cemex opted to launch arbitration proceedings (File Photo: AFP)

Economy
In 2007 Hugo Chávez Frías ordered a series of nationalizations and continued to do so throughout 2008 in different sectors. Nevertheless, payments on these acquisitions have not been filed.

In relation to at least three of the companies acquired, the government must pay USD 2.4 billion or an even higher sum if other firms, whose values are being assessed, are taken into account.

In the first quarter of 2008, state-run oil corporation Pdvsa purchased Lácteos Los Andes, Tropigas and Vengas, as well as a meat-packing company, and paid over USD 250 million.

During the second and third quarters, even more nationalizations were performed. In fact, takeover of the shares of steel maker Sidor and cement companies Lafarge, Holcim and Cemex, as well as Spanish Santander financial group's branch Banco de Venezuela, was carried out. Also, companies in the Orinoco Oil Belt were acquired.

Work in progress
In May oil joint ventures, in which the government holds a majority stake, were incorporated in the Orinoco Oil Belt, but not all oil firms agreed to the terms demanded by Pdvsa. Both Conoco and Exxon opted to enter into arbitration, and the value of their shares has not been properly appraised. Consequently, the amounts to be paid remain unknown.

From May to June, nationalization decrees were enacted in relation to Sidor and the cement companies. With regards to the steel company, and following long negotiations with the Ternium group, the price set for the respective interest in the company was USD 1.6 billion; however, valuation of the company is still being performed and no payments have been made.

A similar situation takes place in relation to the cement companies. Of the three companies nationalized, the government has managed to enter into payment agreements with Lafarge and Holcim for USD 819 million. Although four months have elapsed, no payments have been made.

A compulsory purchase of Cemex was ordered, and authorities held meetings to set the value of its shares. The government estimated the company's value at USD 650 million while the Mexican company asked for USD 1.3 billion. Lacking an agreement, the cement company opted to file for arbitration.

In August, the government announced the nationalization of Banco de Venezuela. In this case, authorities held conversations with Grupo Santander and only recently were the resources for appraisal of the financial institution approved. Analysts estimate that the shares of the institution are valued at approximately USD 1.2 billion.

A few days ago, the minister of Public Finance announced that surplus from 2008 will be used to pay for the outstanding sums, but failed to provide further details.

Even though the government has still to fulfill payments on nationalizations commenced eight months ago, a new compulsory acquisition has been announced. On December 14, President Chávez said that the Sambil shopping mall, located in La Candelaria, in the downtown area of Caracas, would be taken over. The cost of this asset is estimated somewhere between USD 50 million to USD 100 million.

In the midst of a highly probable fall in income as a result of tumbling crude oil prices, the government must find ways to fulfill its payment obligations arising from nationalizations.

Translated by Félix Rojas Alva

Mayela Armas
EL UNIVERSAL