By Humberto Márquez
CARACAS, Nov 16 1996 (IPS)

The government of Venezuela is accelerating the country’s privatisation process. In the near future, it will sell banks, shares in telecommunications, and steel and aluminium factories.

The privatisation of steel and aluminium industries is scheduled to take place early next year. According to sector managers, who met at a round table this week, this should earn the government some three billion dollars.

Two thirds of this money, however, will go towards paying for the companies’ debts, including environmental penalties. Congressional representatives are claiming part of the remaining one billion dollars for investment in the southeastern region, where those industries are established.

The Venezuelan Guyana Corporation, which manages heavy industry, will reserve a small percentage of stocks in the steel and aluminium industries for itself, in order to offer it to the public several months after the privatisation of the main portion.

The government opted for the privatisation of the industries as a whole – instead of the concession of plants or the privatisation of management – “so that the totality of the problem could be resolved,” said the Corporation’s president, Elias Ynaty.

The government lacks the resources for the capital investment and new technology needed in the industries. Ynaty explained that the company will instead concentrate on new investments in partnerships with foreign companies, such as Posco of South Korea and Placer Dome of Canada.

This month, the government of Rafael Caldera will begin with the sale of 49 percent of stocks that the government holds in the country’s telephone company. The re-privatisation of the banks that were nationalised during the financial crisis in 1994 is scheduled for December.

Privatisations are part of the programme for opening up the economy, which the government has been applying since April, after signing an agreement with the International Monetary Fund (IMF). The adjustment programme agreed upon with the IMF also included an increase in taxes and prices of basic goods, which caused consumption to plummet and inflation to increase.

Leftist opponents of Caldera – an 80-year-old social democrat – criticize the plan, saying that the companies are being privatised at very low prices. Andres Velasquez, former presidential candidate, for example, said that the Orinoco Steel Company could be worth as much as 7 billion dollars.

Stocks in the telephone company were being offered for 3.07 to 3.50 dollars, while their value was 4.71 in 1991, when the company’s management and 40 percent of its capital was privatised. The government argues that the stocks being sold now are of lower quality, because they will not have votes in the company’s directorate.

Overall, however, resistance to the current privatisation wave has been defeated. Debate is now focussing more on what to do with the money obtained.

Teolinda Yanez, president of the Orinoco Steel Company, said that the sale of that steel company as a unit should motivate investors in the sector to make the company produce at full capacity – instead of the 1.7 million tonnes in 1995 – and will decrease the risk of job losses. There are around 13,000 people working at the Orinoco Steel Company.

“The price of the sales of the industry will ultimately be determined by the buyer, the market,” said Alberto Poletto, Minister of Investments. Unofficially, managers are saying that they should obtain 3 billion for the steel and aluminium industries.

The aluminium sector is facing a debt of 1.2 billion dollars, while the steel sector owes some 600 million. Both should be resolved at the moment of privatisation.

Ynaty said that there are also costs involved for environmental reasons, consisting of reparation of damage and the adjustment of equipment. For both industries, these costs are estimated at around 100 million dollars.

This will leave about 1 billion dollars in the hands of the government. Jorge Roig, a congressional representative for the Radical Party, proposed that 50 percent of this be destined to the area of Guayana, through funds for job protection, for support of small and medium-size business, and new technological development.

Finally, Ynaty said the corporation could reserve 20 percent of stocks, of which half could go to the workers in heavy industry, and the rest to the capitals market to be sold to individual buyers.

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