Chavez to nationalize U.S.-based utility

CARACAS, Venezuela (AP) -- Venezuelan President Hugo Chavez announced plans Monday to nationalize Venezuela's electrical and telecommunications companies, pledging to create a socialist state in a bold move with echoes of Fidel Castro's Cuban revolution.

"We're moving toward a socialist republic of Venezuela, and that requires a deep reform of our national constitution," Chavez said in a televised address after swearing in his Cabinet. "We are in an existential moment of Venezuelan life. We're heading toward socialism, and nothing and no one can prevent it."

Chavez, who will be sworn in Wednesday to a third term that runs through 2013, also said he wanted a constitutional amendment to eliminate the autonomy of the Central Bank and would soon ask the National Assembly, solidly controlled by his allies, to give him greater powers to legislate by presidential decree.

The nationalization appeared likely to affect Electricidad de Caracas, owned by Arlington, Virginia-based AES Corp., and C.A. Nacional Telefonos de Venezuela, known as CANTV, the country's largest publicly traded company.

"All of that which was privatized, let it be nationalized," Chavez said, referring to "all of those sectors in an area so important and strategic for all of us as is electricity."

"The nation should recover its ownership of strategic sectors," he said.

Before Chavez was re-elected last month with nearly 63 percent of the vote, he promised to take a more radical turn toward socialism.

Chavez said that lucrative oil projects in the Orinoco River basin involving foreign oil companies should be under national ownership. He didn't spell out whether that meant a complete nationalization, but said any vestiges of private control over the energy sector should be undone.

"I'm referring to how international companies have control and power over all those processes of improving the heavy crudes of the Orinoco belt -- no -- that should become the property of the nation," Chavez said.

Partnerships sought

In the oil sector, Chavez didn't appear to be ruling out all private investment. Since last year, his government has sought to form state-controlled "mixed companies" with British Petroleum PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA to upgrade heavy crude in the Orinoco. Such joint ventures have already been formed in other parts of the country.

Chavez threatened last August to nationalize CANTV, a Caracas-based former state firm that was privatized in 1991, unless it adjusted its pension payments to current minimum-wage levels, which have been repeatedly increased by his government.

After Chavez's announcement on Monday, American Depositary Receipts of CANTV immediately plunged 14.2 percent on the New York Stock Exchange to $16.84 (€12.95) before the exchange halted trading. An NYSE spokesman said it was unknown when trading might resume for CANTV, the only Venezuelan company listed on the Big Board.

Investors with sizable holdings in CANTV's ADRs include some well-known names on Wall Street, including Deutsche Bank Securities Inc., UBS Securities LLC and Morgan Stanley & Co.

But the biggest shareholder, according to Thomson Financial, appears to be Brandes Investment Partners LP, an investment advisory company in California. Also holding a noteworthy stake is Julius Baer Investment Management LLC, a Swiss investment manager.

Chavez's nationalization announcement came in his first speech of the year, a fiery address in which he used a vulgar word roughly meaning "idiot" to refer to Organization of American States Secretary-General Jose Miguel Insulza.

Chavez lashed out at Insulza for questioning his government's decision not to renew the license of an opposition-aligned TV station.

"Dr. Insulza is quite an idiot, a true idiot," Chavez said. "The insipid Dr. Insulza should resign from the secretariat of the Organization of American States for daring to play that role."

Shades of Cuba

Cuba nationalized major industries shortly after Castro came to power in 1959, and Bolivia's Evo Morales moved to nationalize key sectors after taking office last year. The two countries are Chavez's closest allies in Latin America, where many leftists have come to power in recent years.

On Wednesday -- hours after Chavez is sworn in for another term -- former revolutionary Daniel Ortega returns to the presidency in Nicaragua.

In Managua, Venezuelan Ambassador Miguel Gomez indicated Monday that the two countries planned to work closely together, and said Nicaragua could eventually become Venezuela's top aid recipient -- getting even more help than Cuba and Bolivia, which benefit heavily from Venezuela's petro-diplomacy.

The United States remains the top buyer of Venezuelan oil, which provides Chavez billions of dollars for social programs aimed at helping the poor in countries around the region.

Gomez said Chavez and Ortega planned to sign an agreement on Thursday providing Nicaragua with resources -- he described them as loans -- for infrastructure, health, education, agricultural development and the construction of 200,000 houses, as well as energy and debt forgiveness.