President Hugo Chávez announced a measure to nationalize wholesale gasoline distribution in Venezuela—despite the lobbying of British Petroleum, Exxon Mobil and Chevron, whose local subsidiaries currently control the business. Under the measure, which received initial approval in the National Assembly Aug. 27, the state company PDVSA will control Venezuela's fuel distribution network, although privately owned gas stations will not be nationalized. Dominated by Chávez allies, the National Assembly is expected to give its final approval to the legislation soon.
The law gives distributors 60 days to negotiate the sale of their businesses to the state 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 currently controls 49% of fuel distribution in Venezuela, with the rest controlled by private companies. Chávez ruled out allowing private minority stakes in the distribution business. "This was an old scheme through which some private sectors seized the nation's wealth without a drop of sweat," he said. "That's what they defend."
Congressman Luis Tascón, a former Chávez ally, said the legislation could cause fuel shortages, because the government is not prepared to take full control over distribution. "I'm warning the population that if this law is approved, we are going to see shortages in the short term," said Tascón, one of a handful of lawmakers who oppose against the bill. (AP [2], Aug. 28)
At the inauguration of a new liquefied natural gas plant in Santa Rosa de Barinas, Chávez hailed the technology as the future of vehicular transport in Venezuela, in what the official Bolivarian News Agency called a "Gas Revolution" (Revolución Gasífera). Rafael Ramírez, minister of Popular Power for Energy & Petroleum, said a deal has been struck to import 600 natural gas cylinders from Norway and Portugal, and plans are being prepared to build a cylinder plant in Venezuela for distribution of LNG within the country. (ABN [3], Aug. 31)
See our last posts on the domestic Venezuela [4] and the oil shock [5].
