petroleumworld

VenEconomy:
An insatiable desire for control

Hugo Chávez's desire for control grows daily. His thirst for power seems to be unquenchable.

Yet further proof of this desire to control is to be found in the bill on Reorganizing the Domestic Liquid Fuels Market, which will be debated on the fast track by the National Assembly next Wednesday (August 27), according to a scoop by the journalist Janet Yucra in Notitarde last Sunday.

Like the decree-laws enacted under the special presidential powers, this new legal garbage provides that the State will reserve to itself the intermediation of the supply of liquid fuels as well as the overland transportation, shipping and cabotage of these fuels.

While this reserve does not apparently apply to micro-carriers (those who have four units or less), it seems that it will not be restricted to the transportation of fuel from the refineries to the gas stations, as it will also apply to companies that supply liquid fuel to state-owned companies and private companies in the industrial and food sectors and companies that produce essential goods or inputs.

If this bill is approved, the assets and companies subject to this reserve will be transferred to a domestic haulage company that is an affiliate of Petróleos de Venezuela, S.A. or any other affiliate designated by PDVSA. The time allowed for determining “the value of the assets needed for performing the activities subject to the reserve” may not exceed 60 calendar days.

Employing the same procedure that was used with the cement companies and Sidor, the bill provides that, in the absence of an agreement, the Government will expropriate the companies on the grounds of their being “affected with a public purpose and being of social interest.” It also indicates that, in order to set a fair price for the assets, “account will be taken of investments made and their book value; under no circumstances will account be taken of profits forfeited or indirect damages.” In addition, it empowers PDVSA, or the affiliate it designates, “to execute the prior occupation and operate the assets subject matter of the expropriation.”

But the government's thirst for power and control does not end there. This Friday (August 22), from Barlovento, Chávez decreed the death of all contractors operating in any sector in Venezuela when he harangued, “Contractors have to be eliminated; that is savage capitalism.”

The danger is that, by eliminating contractors, the government will be dismantling all the country's productive sectors, snatching from them the know-how and technology that these specialist companies contribute, and in areas where the government has nothing to offer.

Let no one be deceived, Chávez's purpose is to pass the business sector and the economy over to the State, lock, stock and barrel, for no good reason and without reaching any agreement.

The only encouraging sign in the midst of this “statization fest” is that the spirit of those who do not believe in old-style Caribbean dictatorships seems to be starting to stir. A couple of examples are the signatures that are being gathered, with the encouragement of different professional societies, to get the 26 decree-laws enacted under the special presidential powers annulled and the go-slow by oil workers in Zulia.

VenEconomy is a Venezuela's leading specialized publisher in the economic and financial area. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.

Editor's Note:This commentary was originally published by VenEconomy, on 08/25/2008. Petroleumworld reprint this article in the interest of our readers.

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Petroleumworld News 08/26/08

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