Paraguayan Lower House rejects privatization

All 65 lawmakers present for the congressional session voted against the plan to partially or completely sell off some public firms. While the legislators voted, thousands of peasants and workers protested against the plan outside Congress.

The lower house decision will force the measure back to the Senate for further consideration. The bill voted down Thursday includes the telephone and water firms and the now-inactive railway company.

Rejection by the lower house, dominated by the ruling Colorado Party, means a new freeze for the process that was halted in mid-2002 by then-President Luis Gonzalez Macchi after a wave of popular protests.

After the vote in Congress, the peasants and workers moved to the Pantheon of Heroes a few streets away, where their leaders publicly called off the protests, which began on Monday with marches in the capital with periodic highway roadblocks in the rest of the country.

President Nicanor Duarte reiterated Wednesday that he favors reactivation with private investment participation of in-the-red government companies because their outright sale or assets "liquidation" would represent "very little money" for the Treasury and no incentive for the economy.

"We want to preserve the government companies, make them efficient and create conditions of credibility for strategic alliances. For example, public or private participation ... is a model that's having success in many countries" president Duarte said.

In Paraguay, the first stage in the sale of loss-making state-owned companies goes back to 1994 when LAPSA airline was sold to an Ecuadorian firm. Later, Congress authorized the sale of other companies, among them steelmaker ACEPAR and sugar refiner CAPASA.