The President of Venezuela has recently announced plans to nationalise strategic industry sectors, such as oil, electricity and telecoms. President Hugo Chavez has vowed to impose a takeover of oil majors' operations in Venezuela, for control over what he calls the earth's hugest oil reserve. The President has vowed to sign a decree to allow the Venezuelan government to take majority control of oil projects in the Orinoco River basin by 1 May. He said that state oil company Petroleos de Venezuela SA would take a stake of "no less than 60%".
The President also intends to nationalise the electricity sector, including taking US-based AES Corp.'s 87% stake in the sector's flagship company, Electricidad de Caracas ("EdC"). The takeover of EdC could be completed as early as June this year.
The President has said that he will also use his special decree powers to nationalise the country's biggest telecommunications company. Other operators and utilities might also face such measures.
Foreign investors will need to consider whether they have any legal remedies in the event they are or might be affected by any such moves by Venezuela, despite Government officials having said that nationalisation will be carried out in line with the law, indicating shareholders will be compensated.
In addition to any contractual remedies that might be available to investors, Venezuela is a party to around twenty bilateral investment treaties, which might allow investors to take its complaints (and claims for compensation from Venezuela) to international arbitration administered by ICSID.