August 27, 3008
Lawmakers loyal to President Hugo Chavez want to allow the nationalization of fuel distribution, the government's latest move to bring Venezuela's economy under increased state control.
Under a bill likely to win initial approval Wednesday, fuel distributors including subsidiaries of British Petroleum, Exxon Mobil Corp. and Chevron Corp., would have 60 days to negotiate the sale of their businesses to the government or face expropriation.
A subsidiary of Venezuela's state-run oil company, PDVSA, controls 49 percent of the fuel distribution in this South American nation. The remaining 51 percent of the distribution is controlled by private companies.
The draft law under discussion would also force distributors to sell storage tanks and gasoline pumps to PDVSA. Distributors would also have to give up their brand names, essentially making them PDVSA contractors.
The Chavista-dominated National Assembly plans to give initial approval to the bill on Wednesday, but privately owned fuel distributors hope to convince congressmen not to seize total control of their businesses.
"Together we can form joint companies with PDVSA, and that way we can continue providing our experience and knowledge of the business," said Armando Almada, president of an umbrella group representing fuel distributors.
Orlando Gonzalez, vice president of Trebol Gas, said fuel distributors are open to the state taking majority control of fuel distribution.
Trebol and Llano Petrol, another local distributor, together control 26 percent of distribution market. BP controls 7 percent of the market while Exxon and Chevron control 5 percent and 3 percent, respectively.
The remaining 10 percent is controlled by smaller Venezuelan companies.
Under Chavez, Venezuela has nationalized its largest telephone, electricity, steel and cement companies and has assumed majority control over four major oil projects.