Venezuelan Legislature Debates New Law to Nationalize Gasoline Distribution

Mérida, August 28, 2008 (venezuelanalysis.com)– Venezuela's National Assembly completed its first reading of a new
law on Wednesday, which would put distribution of fuel back into the hands
of the government, in an effort to reduce middleman profits, improve
service and working conditions, and prevent smuggling of fuel across
the border.

Chavez stressed that the “Organic Law of the Reordering of the Internal Market of Liquid Fuels” will eliminate the capitalist intermediaries of Venezuelan fuel.

Private companies run 60% of the 1,854 country’s service stations, according to Chavez, but transnational companies finance the majority of these.

He explained that the state owned oil company PDVSA sells fuel to the intermediaries, who then, without investing anything, take the fuel to the service stations, selling it for a profit, to the detriment of the owners of the gas stations. Therefore, through direct selling by PDVSA, the small proprietors of the service stations could obtain higher profits.

A company affiliated with PDVSA would be created to handle the transportation of fuel. The Minister for Energy and Petroleum and president of PDVSA, Rafael Ramirez, suggested this would enable the state to guarantee better working conditions as well.

According to the president of the National Assembly Commission of Energy and Mines, Angel Rodriguez, workers could count on social security and social and economic benefits that they haven’t had until now.

Rodriguez explained that one of the main motivations behind the new law is the relief of bottlenecks occurring in the transport of fuel. He highlighted that the transporters are a vital link for the distribution chain. Minor delays in the loading of fuel are magnified into large problems when it comes to filling the service stations.

“This has a negative psychological effect on the end consumer, who at the time of deciding who is to blame, points at PDVSA and therefore at the National Government.”

He also explained that government responsibility over distribution of fuel “doesn’t have any negative implications for the service stations, only that now…we’re going to guarantee that these installations are in excellent condition, that they have bathrooms and function during night hours, in order to guarantee good public service for our people.”

Chavez maintained that the intermediaries are also selling a large amount of the fuel over the border. Rodriguez suggested that the increase in the participation of the state in the chain will improve the control of activities inherent to the distribution of fuel, reducing such illegal smuggling, where around 27,000 barrels are cross the Venezuelan border daily.

Ramirez also clarified that, “the law does not provide for the forcible transfer of these outlets to the communal councils. An aspiration of the Bolivarian government is that these popular organizations have an important participation in this activity. This change would be progressive, and one of the alternatives being studied is the transfer of the administration of new service stations or of some of those that are already property of the state.”

The communal councils would only be able to participate in the administration and management of the 156 service stations that are the property of PDVSA.  “The profit derived from this operation goes to the Communal Bank to finance local projects,” Ramirez said.

Rumors about the Fuel Distribution Law Denied

Many of the private media outlines reported that the government is planning to expropriate the nation’s gas stations.

An article on the website of the newspaper El Nacional of August 27, 2008, claimed “experts” had told the paper that the government would cover state debts with the income from gas. The article warns of deteriorating service, risks to consumers, gas shortages and price increases.

The newspaper El Tiempo argued that the laws were just an attempt by the government to cause conflict. In a separate article, the ex president of the National Chamber of Transport, Arsenio Manzanero, warned that they “aren’t going to accept that they are expropriated” – referring to the state control of fuel transport.

Chavez referred to distortions as the ‘war laboratory’, and declared, “These pitiyanquis [Venezuelans at the service of US imperialism] are trying to manipulate the minds of Venezuelans or of a group of Venezuelans, hiding the truth in an attempt to generate protests…so this becomes a call to destabilize the country.”

Mario Isea, leader of the socialist block in the national parliament, also referred to the media campaign as “a maneuvering of sectors of the opposition who are trying to create discontent.”

Referring to the threat by some transporters, especially in the west of the country, to strike, he warned that there can’t be any interruption in the supply of fuel.

And Ramirez refuted any possibility that the law planned to expropriate service stations, “Anyone…can consult…the webpage of the National Assembly and they would realize that what has been said about this subject in the media is false.”

In fact, what the law specifically applies to is the brokering activity for the supply of liquid fuels, conducted between PDVSA and the institutions devoted to the sale of such fuels. This includes land and water transport and cabotage of the fuel.