Venezuelan Finance Minister Announces Indemnity Agreement for Nationalized Steel Plant

Mérida, March 27th 2009 (Venezuelanalysis.com) — Venezuelan Finance Minister Ali Rodríguez announced Wednesday that the Venezuelan government has reached an agreement with the Argentine-controlled conglomerate Techint Group on a payment plan for the SIDOR steel plant, which Venezuela nationalized last May following a 16-month collective contract dispute between the company and the United Steel Industry Workers Union (SUTISS).

“An agreement on a payment system has been reached with SIDOR. The deal is closed… and payments are underway,” Rodríguez told the press Tuesday.

Techint spokespeople declined to comment publicly on the matter, and the Argentine newspaper Clarín reported that the company had not notified stock holders about any formal indemnity agreement.

Rodríguez did not specify the amount of indemnity to be paid. When the Venezuelan government privatized the steelmaker in 1997, Techint paid $1.5 billion for its 60% share, and the government and the workers union each retained 20% shares.  

When indemnity negotiations began last year, the government initially offered $800 million, based on current stock values and discounting environmental damages and workers rights violations. Techint demanded $3.6 billion, based on the opportunity cost of purchasing a steel plant of similar capacity elsewhere.

Last August, the government and Techint nearly reached an indemnity agreement of $1.65 billion for 50% of the company, which would have left Techint with a 10% stake and the government with a 70% stake, and the workers would have retained their 20% stake.

During Techint’s decade of ownership, the company had pushed two-thirds of the SIDOR workforce into non-unionized contract work, maintained dangerous working conditions, and refused to increase worker salaries for more than two years before the company was nationalized under union pressure last May.

Within a month of the nationalization, the government and SUTISS signed a collective contract that satisfied the workers’ demands for pay and benefits, and put more than a thousand contract workers on track to unionization.

However, a group of approximately 5,600 workers from a variety of companies that provide contract services to SIDOR announced this Wednesday that they have formed a new United Socialist Contract Workers Union.

The union will demand “dignified salaries and benefits in equal proportion to everyone who works in SIDOR and in concordance with unionized SIDOR workers, because there should be equal pay for equal work,” according to the union’s general secretary, Hugo Bastardo.