Severity 4 — Severe💰 economy01 May 2007

Nationalisation of Oil, Telecoms, Electricity, and Heavy Industry

Between 2005 and 2009, Chávez's government converted 30 of 32 private oil operating agreements into PDVSA-controlled joint ventures, decreed a minimum 60% state share in the Orinoco Belt, and renationalised the telecoms company CANTV (paying $1.3bn for 79.6% of its shares) and the electricity utility Electricidad de Caracas. Steel, cement, and banking followed. The programme was funded by, and in turn deepened the state's dependence on, oil export revenue.

MVR

Hugo Chávez — Fifth Republic Movement (MVR) / PSUV

In power 1999–2013

What happened

The nationalisation wave was not a single decree but a sustained, multi-year programme spanning Chávez\'s second and third terms. In the oil sector, Venezuela converted 30 of its 32 existing private operating agreements into PDVSA-majority joint ventures by the end of 2005, then went further in April 2007 with Decree 5200, which set a mandatory minimum 60% state stake in the Orinoco Belt's heavy-crude projects — forcing out ExxonMobil and ConocoPhillips, who refused the new terms and pursued (largely unsuccessful) international arbitration for years afterward.

Outside oil, the government renationalised CANTV, Venezuela's dominant fixed-line and mobile telecoms provider, in May 2007, paying roughly $1.3bn to acquire 79.6% of its shares from a Verizon-led consortium. The same year it bought out Electricidad de Caracas, the capital's electricity utility, for $739m, and the smaller utility SENECA outright. Steel producer Sidor, several cement plants, food distribution and supermarket chains, and much of the banking sector were brought under state control in the years that followed.

In the short term, oil-funded state control allowed the government to redirect industry profits directly into social spending. Over the following decade, however, PDVSA's own production collapsed — from roughly 3.2 million barrels a day in 1998 to under 1 million by the late 2010s — as state management prioritised political goals and payroll patronage over reinvestment and maintenance, a trajectory economists at the Council on Foreign Relations and elsewhere have linked directly to the underlying causes of the later hyperinflation and economic collapse recorded under Maduro.

Source

Forbes — Venezuela, Maduro And The Long Shadow Of Oil Expropriation

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