Venezuelan Lawmaker: Oil Fund Could Finance Nationalization

Venezuela could finance the nationalization of its power industry, Orinoco heavy crude projects and fixed-line telecom operator Cantv with money from development fund Fonden, Ricardo Sanguino, president of the national assembly's finance committee, told BNamericas.

State oil company PDVSA is the main contributor to Fonden.

"The law allows for Fonden to cover those disbursements," he said. "Or it could be a combination of resources: money from the [central] reserves also could be used."

Venezuela's central reserve holds US$36 billion, while Fonden is a rolling fund that usually has about US$8 billion. The fund mostly finances community-size initiatives such as schools and free clinics.

The government aims to ask PDVSA to increase deposits into Fonden, finance minister Rodrigo Cabezas told newspaper El Universal, without providing details.

LEGAL STRUCTURE

President Hugo Chavez on January 8 announced his plans to nationalize the power, oil and telecommunications assets, providing little detail as to how he would structure and finance the move.

The president will have to ask the pro-government single-chamber national assembly to approve laws to support the nationalization agenda, according to the energy and oil ministry (MEP).

Sanguino said either one law could handle the entire nationalization process or separate laws could rule on the different industries.

"We have yet to receive the draft of the nationalization bill from the executive, but yes, there could be one law for each part of the nationalization," he said.

Meanwhile, it is still unclear how exactly Venezuela will nationalize the Orinoco assets, considering Chavez focused attention only on their upgrading assets.

The Orinoco upgrade assets are part of the four E&P joint ventures in the belt that collectively produce 500,000-620,000b/d heavy crude. PDVSA holds less than 50% of the four JVs.

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