Venezuela Owes $12 Billion for Seizures, Chamber Says (Update1)

March 3 (Bloomberg) -- Venezuela owes $12 billion to more than 20 companies that belong to the Venezuela-U.S. Chamber of Commerce for assets the government seized over the past three years, chamber President Carlos Henrique Blohm said.

The assets of 28 members of the chamber, including nine companies that provided oil service work for state oil producer Petroleos de Venezuela SA, have been nationalized Blohm said. Of the nationalized companies, 22 have received no response from the government to their requests for compensation, he said. Four companies have been paid, and two have received partial compensation, Blohm said.

“PDVSA is very behind in paying off debts to some of our members,” Blohm said in an interview, declining to name any of the companies that are owed money for compensation.

Venezuelan President Hugo Chavez has nationalized parts of the country’s oil, cement, metals and utilities industries as he extends the role of the state in the economy to create what he calls “21st century socialism.” U.S. oil companies Exxon Mobil Corp. and ConocoPhillips, whose assets were taken in 2007, are involved in arbitration proceedings against the South American country.

The chamber of commerce, known as Venamcham, has more than 1,100 members including Cargill Inc., Kraft Foods Inc., Nestle SA, Ford Motor Co. and General Motors Co.

Bilateral trade between Venezuela and the U.S. was $37.4 billion last year, according to the U.S. State Department.

Dollar Sales

Members of the chamber of commerce are also owed about $7 billion in delayed dollar sales at the official exchange rates, Blohm said. The Foreign Exchange Administration Commission, known as Cadivi, which approves dollars for importers as part of currency controls established in 2003, has recently been assigning dollars approved as long as a year ago, Blohm said.

The dollars at the official rate would be used to repatriate as much as $1 billion of dividends, he said.

Phone calls to the communications office of Cadivi seeking comment weren’t answered after regular business hours.

Cadivi has been adapting its system to process requests at two different exchange rates after Chavez devalued the bolivar currency on Jan. 8 and created a multi-tiered exchange system where imports considered essential are given 2.6 per dollar and non-essential goods receive 4.3 per dollar.

Unregulated Markets

Companies that don’t receive government approval to buy dollars at the official rates turn to the unregulated currency market, where traders said the bolivar traded at 6.85 per dollar today.

Venezuela’s electricity rationing and rolling blackouts this year may shave 1 percentage point off gross domestic product, Blohm said. The economy shrank 3.3 percent in 2009.

Nationalizations have begun to weigh on growth as investment dries up and the state plays a bigger role in economic activity.

The private sector shrank 7 percent in the fourth quarter compared to a 0.3 percent contraction for the public sector, the central bank said yesterday. Aggregate demand and investment plunged 18.2 percent and 19.6 percent respectively in the quarter.

Foreign direct investment in Venezuela fell $3.1 billion in 2009, the lowest figure on record since the central bank began to publish the data in 1997.

“This shows a considerable lack of investment,” Asdrubal Oliveros, a director at Ecoanalitica in Caracas said in a phone interview. “That’s a direct product of the expropriations undertaken by this government.”

--Editors: Brendan Walsh, Robert Jameson

To contact the reporter on this story: Corina Rodriguez Pons in Caracas at crpons@bloomberg.net; Daniel Cancel in Caracas at dcancel@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net