Victim of His Power Grab

Chavez's Nationalization Disillusions Utility-Owner AES

Dennis W. Bakke remembers Venezuela's President Hugo Chavez as a charming conversationalist. Chavez loved to talk about baseball and closely followed the fortunes of Venezuelan players in the U.S. major leagues.

And when it came time to talk business, Chavez was supportive. Bakke, then chief executive of AES, wanted to know what the populist leader of Venezuela thought about an Arlington power-generation company spending about $1.7 billion to buy a controlling stake in the Caracas electric utility.

"He was very reassuring," Bakke says. On April 28, 2000, after one of their meetings, Bakke and Chavez emerged from the presidential residence La Casona all smiles, according to one newspaper report. Chavez called Bakke a "revolutionary entrepreneur who wanted to invest in Venezuela." Bakke said he had come to Caracas to "learn how to be a revolutionary businessman."

Seven years later, no one at AES is smiling, and there was nothing reassuring about the Jan. 8 announcement by Chavez that he would nationalize the telecommunications and electric utility industries, including the 82 percent AES stake in the Grupo La Electricidad de Caracas (EDC). The minister of mines and energy, Rafael Ramirez, said on Monday that it was a "reasonable" goal to take over EDC by June as part of a nationalization in which at least four utilities could revert to state control.

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