Chavez Set to Nationalize Electrical and Telecommunication Companies

Hugo Chavez, President of Venezuela, ahead of being sworn in for a third term in office that would run till 2013, has taken a bold step to transform the country to a socialist nation, by declaring his intention to nationalize electrical and telecommunication companies. This initiative is seen as part of the pledge he made before his election, of transforming Venezuela to a socialist country.

In a nationally televised address he made just before swearing in a new cabinet, Chavez said, “All of that which was privatized, let it be nationalized,” referring to all the sectors that were vital to the nation, especially in an area such as electricity. He said, “We’re moving toward a socialist republic of Venezuela and that requires a deep reform of our national constitution.”

The nationalization initiative will affect companies already on the ground in Venezuela, including Arlington-owned Electricidad de Caracas, CA Nacional Teléfonos de Venezuela, popularly known as CANTV, which also happens to be the nations’ largest publicly traded company, and also Virginia-based AES Corp.

He also mentioned his desire to have in place a constitutional amendment that would nullify the autonomy that the central bank currently enjoyed. He declared he would, in the near future, ask the national assembly to grant him wider powers to enable approval of a set of revolutionary laws by presidential decree. This should not be too much of a problem for Chavez, considering his allies control the national assembly.

Elected for the first time in 1998, Chavez has steadily been remaking Venezuelan society. He has been rewriting laws, setting up state-funded cooperatives, and handing over large tracts of ranch land to poor farmers through his land reforms program. His remodeling is based on the work done in Cuba, his closest ally now, when Fidel Castro came to power there in 1959.

According to Chavez, the cash-spewing oil projects, currently involving foreign companies, in the Orinoco River Basin should come under Venezuelan national ownership. However, he has not made it clear whether he intends totally nationalizing these companies.

As of now, the oil sector has not been totally nationalized; instead, he has been forming ‘mixed companies’ with British Petroleum, Exxon Mobil, Chevron, ConocoPhillips, Total SA, and Statoil ASA. All these companies are, however, state-controlled. The government has been forming such joint ventures all across the country.

Chavez’s current declaration, of nationalization in the electrical and telecommunication sectors, has seen a 14.2% downslide in American Depositary Receipts of CANTV on the New York Stock Exchange prior to stopping of trading at the exchange.

Chavez calls his initiative the Bolivarian Revolution, after the independence hero of South America, Simon Bolivar. Applauded by cheering supporters, Chavez declared, “The eight-year transition phase is ending and we are entering a new era, the Simon Bolivar national plan, Bolivarian socialism.”