Chavez Nationalizes Plant Partly Owned by US

Published: Monday, 11 Oct 2010

By: Reuters

Venezuela's President Hugo Chavez nationalized a large U.S. and Italian-owned fertilizer factory on Sunday, just days after vowing to radicalize his state-led revolution in the aftermath of elections last month.

The government will take over Fertinitro, one of the world's main producers of nitrogen fertilizer and part-owned by private U.S. company Koch and Saipem, a subsidiary of Italy's Eni, Chavez said.

During 12 years in power, the 56-year-old former soldier has put large swathes of the OPEC member country's economy into state hands.

On Sunday, he also announced the nationalization of Venezuelan motor lubricants company Venoco. "Expropriate it." Chavez said in a live TV broadcast from a farm the government bought two years ago.

He then said the government will take control of almost 200,000 hectares (494,000 acres) of land owned by British meat company Vestey Foods Group on October 20. The government has been in talks for months to buy the Vestey cattle ranches.

"It's a friendly agreement, I am very thankful to the owners of the English company, which has been here for more than 100 years," Chavez said, on the six-hour TV show. In 2005, the government nationalized four Vestey cattle ranches, turning the land over to hundreds of peasant farmers who grow mainly vegetables, maize and beans.

The president also said he was sending a bill to parliament that will allow the government to expropriate unused urban land and stalled construction projects, in a bid to speed up new home builds.

A shortage of quality housing is a serious problem that Chavez has struggled to tackle, with many of the country's more than 28 million people living in precarious city slums prone to collapse in the rainy season.

The housing deficit is exacerbated by a fast-growing population. Chavez has stepped up nationalizations since his Socialist Party won a reduced majority in a legislative election in September.

Last week the government took over agricultural supplies firm Agroislena.

When the new parliament is formed in January, the Socialist Party will not have the two-thirds majority needed to pass some major legislation, such as the urban land bill, which will likely be passed before then.

Venezuela's state petrochemicals firm Pequiven holds 35 percent of Fertinitro, a Koch Industries subsidiary holds 35 percent and Saipem holds 20 percent. Another 10 percent is owned by Venezuela brewer and food firm Polar.

The affected companies did not immediately respond to requests for comment.

Last month, Fitch Ratings maintained Fertinitro Finance's $250 million 2020 bonds at 'CCC' on rating watch negative.

"Fertinitro, located in the Jose Petrochemical Complex in Venezuela, ranks as one of the world's largest nitrogen-based fertilizer plants, with nameplate daily production capacity of 3,600 tonnes of ammonia and 4,400 tonnes of urea," the Fitch report said.