CARACAS, Venezuela ( Associated Press) — In a break from its socialist model, the Venezuelan government plans to open up a number of state-owned companies in sectors critical to private investment as it seeks to provide capital for businesses with severely under-investment. wants to satisfy the need. Very few details about the move are raising doubts.
The government intends to sell 5% to 10% of the shares in various companies, some of which were nationalized by the late President Hugo Chávez in his bid to turn the South American country into a socialist state. But basic information for the public offering, including the number of shares, stock price and exchange in which a company will be listed, ahead of the planned Monday sale, remains unclear.
Chávez’s successor, President Nicolas Maduro, said this week that the sale would be “fundamentally” geared toward local investors, but foreign money could also flow into companies including telephone and Internet service provider CANTV, which the government called Verizon’s company in 2007. Nationalized after buying stake.
“We need capital to grow all public companies,” Maduro said during a televised program on Wednesday. “We need technology. We need new markets, and we’re going to move forward.”
Interest, however, may be limited to investors with ties to the government or those with a risk appetite.
The country is still subject to economic sanctions imposed by the US and other countries that prevent investors from being able to invest money in Venezuelan state-owned companies. And the percentage that Maduro announced would not give private investors the decision-making power to make much-needed changes within corporations.
Among the companies Maduro mentioned are CANTV and its subsidiary Movilnet, petrochemical manufacturer Petroquimica de Venezuela, and a group focused in the mining sector. Some of the CANTV shares already trade on the Stock Exchange of Caracas, the oldest exchange in the country.
At the turn of the century, Chavez made several acquisitions in the power, telecommunications, natural gas and oil sectors. But the government has made minimal investment in some of these companies, which has stopped providing them substandard services.
It is common for the entire country to have power outages throughout the day. Lakhs of homes either have no water or the service is running intermittently. Internet and phone services are lacking.
Supporters and opponents of the government alike complain about poor basic services across the country, even when elections are not near. But economists point out that Venezuela’s government needs to reform some of those services, even if it is slightly ahead of the 2024 presidential election.
“There is no doubt that we are witnessing a change that is largely forced by circumstances, but also largely driven by political survival,” said Luis Prato, senior economist at the firm Torino Capital. “From June 2014, with this significant drop in oil prices, the Maduro administration began to see a decline in oil revenues. Then, we went through a period of price control, from 2014 to 2019, of a more interventionist state. But To the extent that the state began to dwindle in funding and development potential, it began to make room for private sector participation.”
Venezuela is still in a protracted social, economic and humanitarian crisis, attributed to falling oil prices, economic sanctions and two decades of mismanagement by socialist governments. But the government has taken steps to relieve some of the economic pressure, including abandoning its long and complicated efforts to restrict transactions in US dollars in favor of the local bolivar, whose value has been depleted by inflation.
Maduro said during this week’s announcement that state-owned companies would be listed on the country’s “various stock exchanges” without specifying.
But as of Friday, the chairman of the Stock Exchange of Caracas, Gustavo Pulido, had not received any information about the planned stock sale. He said the process of registering and eventually listing other companies is lengthy and requires disclosure of financial documents.
“It takes as long as you want to make a placement successful. I can’t tell you a certain amount of time,” Pulido said, noting that an offering on Caracas’ stock exchange may not be structured until Monday.
The government set up its own exchange in 2010. A government spokesperson did not respond to a request for comment from the Associated Press about the exchanges it intends to use.
Prato said the government is likely to use its own exchange or a separate digital system for now, but that this will have limited consequences.
Henkel García, director of Caracas-based firm Econometrica, said companies needed significant investments to improve the quality of their services, which were much better before nationalization. But he cautioned that the country lacks a mechanism to oversee the accounting and financial reporting processes of companies, which makes it impossible to guarantee that private investment in state companies will be spent appropriately.
The missing component, he said, creates a scenario similar to the post-Soviet reforms in which a large number of state-owned companies were privatized.
“If it’s really the start of handing out total sales or total of these companies, that’s a likely scenario for me, and one has to ask who they’re going to be handed over because we have episodes like Russian, in which these companies that never of the state, passed into the hands of people close to the government,” Henkel said. “So, it is a complex phenomenon that one might say opens the door to something positive, but with the institutional weakness we have and credible With the lack of referees, it may not end in the best way.”