The previous government of Rafael Caldera failed on three attempts to sell a 70 per cent stake in the four-company Corporacion Aluminios de Venezuela (CAV) as bidders withdrew citing legal concerns and a high base price of $1.55 billion for the whole of the complex.

"We estimate that the process will be completed next year," Pedro Echeverria, the deputy head of the Venezuelan Investment Fund (FIV), the state-run privatization agency, told reporters on the sidelines of a conference.

Echeverria said that it was "a possibility" that the goverment could sell some of the better prepared companies this year.

Aluminum smelter Venalum, the larger and more modern of the CAV's two smelters with an installed capacity of 430,000 tonnes of alumina per year, is likely to be the first to be sold.

FIV head AntonioGiner said in early May that Chavez's government would sell only the assets not equity of Venalum.

The state is looking for a strategic partner for the other smelter, Alcasa, which is expected to produce only 170,000 metric tonnes in 1999 and has debts totaling $800 million. This company will be grouped with carbon anode producer Carbonorca.

Mining group Billiton Plc and Aluminum Company of America are thought to be most interested in bauxite and alumina producer Bauxilum, according to industry insiders. Meanwhile, the downturn in Pakistan's aluminium industry could drag on because of a drop in public sector spending on construction and high duties on raw materials, an industry executive said.

"Demand is declining by almost 10 to 15 per cent every year and this year it (the drop) could be higher because there are no new government projects," said Rizwan Saeed, sales director at ALCOP, the Aluminium Co of Pakistan Industries Ltd.

He said public spending on construction has been declining for severalyears, and was hit further in the current fiscal year to the end of June which saw gross domestic product grow by just 3.1 per cent instead of the earlier forecast of six per cent.

"A lot of companies have shut down their operations, .three in Karachi recently," he said.

Saeed said annual domestic demand of 30,000 tonnes mainly went to the architectural and engineering industries.

"The metal is also used in fans and by the cable industry," he said.Saeed said the raw material for aluminium was sourced mainly from Bahrain and from Europe, but he added aluminium was also widely recycled in Pakistan."Most of it is recycled in Pakistan. We melt down the aluminium cuttings and sections to suit our needs," he said.

He said scrap from the ship-breaking industry along the coast of southwestern Balochistan province also helped meet domestic demand.Saeed also said the industry was hindered by the government's import duty structure for aluminium.

"There is 15 to 25 per cent duties on (the import) of finishedgoods whereas the incidence of duties on raw material is 40 per cent," he said.He said the aluminium industry was surviving because the weaker rupee against the dollar was making domestic products more competitive."Raw material accounts for 30 per cent (of the cost) of our product, the rest is processed locally," he said.

Saeed said the slack domestic demand had prompted manufacturers to explore international markets such as Bangladesh and Sri Lanka.

ALCOP was formed in 1973 to manufacture and sell aluminium extruded products and is the industry leader in Pakistan.