Venezuelan Parliament Okays Government to Own All Shares of New National Airline

The Financial Commission of the Venezuelan Parliament greenlighted the state to own the total amount of shares of flagship airline Conviasa with a $16 million down payment forked over by state-run company Petroleos de Venezuela.

Members of Parliament explained this is the last necessary step for the creation of Conviasa (Venezuelan Consortium of Aeronautical Industries and Air Services, S.A.), an endeavor outlined by the Venezuelan government in order to secure domestic and international air transportation, as well as to promote tourism.

Conviasa will come into being with a public fund of $16 million at the ongoing currency exchange rate of 1.9 bolivars to the dollar.

The company’s capital will be bankrolled with state funds coming from oil exports. With that aim in mind, execs have just opened a mutual account for $16 million in the Bank of Economic and Social Development, and named Petroleos de Venezuela the account bookkeeper and Conviasa the main beneficiary.

The use of these funds was ordered last month by Venezuelan President Hugo Chavez as he announced the creation of a special development fund fed on by cash from oil exports and tax money with a view to finance a number of development projects, especially in infrastructure.

The creation of the mutual fund has sparked off controversy as private economists point out that Petroleos de Venezuela has poured money into that account that has not been deposited in the Central Bank of Venezuela. Critics are also lashing out at the government about additional funds from spiking oil prices that have been reportedly used in different investment projects and for the company’s own improvement.

Overseas sales of Venezuela’s crude oil –the world’s fifth largest exporter- chip in three quarters of the South American nation’s hard-currency income.

Conviasa will take up the void left by Viasa (Venezolana Internacional de Aviacion) whose flights came to a close on January 1997 on a decision made by Spanish airline Iberia, which had bought out the air carrier from the Venezuelan state as part of a privatization process.

The opening of the new airline comes within the framework of an advertisement plan spurred by the Chavez administration in an effort to double the number of foreign tourists coming to Venezuela –now hovering around three quarters of a million visitors- and to triple the amount of domestic sunbathers, currently in the neighborhood of 13 million trekkers a year.