Chavez runs short of cash for takeovers as oil slumps

Chavez runs short of cash for takeovers as oil slumps
20 March 2009

Venezuela is holding up payments to contractors, oil services companies and targets of President Hugo Chavez’s nationalization drive, indicating the country is running short of cash after petroleum prices collapsed, reports Bloomberg.

Service providers to the state oil company are idling rigs for non-payment, and Brazil’s Odebrecht SA said last week it’s slowing work on the Caracas metro because the government is past due on its bills. Chavez also owes US$10.2bn for companies he’s taken over, according to an estimate by Caracas-based economic consulting company Ecoanalitica.

“The economic environment isn’t particularly conducive for any good deals for companies awaiting payment,” said Alvise Marino, an emerging markets economist at IDEAglobal in New York. “If I was one of the companies involved, I wouldn’t keep my hopes up.”

Now Lafarge says the government is past due on a US$267m payment for the takeover of its local unit last year. Holcim Ltd is still waiting for US$552m, company spokesman Peter Gysel said on March 12.

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