MercoPress. South Atlantic News Agency

Chavez nationalizes domestic fuel wholesalers

Venezuela takeover fuel distribution

President Hugo Chavez got the legislative rubber stamp Thursday he needs to complete his effective nationalization of Venezuela's fuel industry.

Under the newly passed bill wholesale distributors will have 60 days to sell their businesses to the state oil company, Petroleos de Venezuela SA (PDVSA), or face expropriation. The legislation applies to all wholesalers from mom and pop distributors to the local subsidiaries of multinationals including BP ExxonMobil and Chevron. Chavez has already put exploration and refining in state hands, with some involvement of private partners, by assuming majority control over four large-scale oil ventures, a move that forced Exxon Mobil and ConocoPhillips to leave Venezuela, with ExxonMobil fighting a contentious law suit for $12 billion of compensation. The latest legislation gives PDVSA monopoly control of wholesale fuel distribution. Currently, two local companies, Trebol and Llano Petrol, control 26% of the wholesale market between them. BP controls 7% Exxon and Chevron control 5% and 3% respectively. The rest is divided between small Venezuelan companies. Two-thirds of Venezuela's gas stations can remain privately owned, though they will now have only one supplier -- PDVSA. The state oil company is creating a new transportation business to ship to gas stations, and will pay a reported $325 million to acquire 1,200 fuel trucks currently owned by private wholesalers. Venezuela is the world's fifth-largest oil exporter and oil accounts for 90% of its exports by value. Chavez wants to maximize the government's take in order to fund what he calls "21st century socialism". He has also nationalized the largest telephone, electricity, steel and cement companies. Chavez's overt reason for this latest measure is that is is needed to stop intermediary firms from profiting from high oil prices. The government has also said the measure will help stop the illegal smuggling of the country's highly subsidized gasoline to Colombia and Brazil. Venezuela's pump prices are some of the lowest in the world at $0.18 a gallon for premium fuel.