Venezuela state oil company to create food subsidiary

CARACAS, Jan 6 (Reuters) - Venezuelan state oil company PDVSA is creating a subsidiary to produce and distribute food in the OPEC nation, President Hugo Chavez said on Sunday, following months of shortages of basic food products.

After a stinging December poll defeat, Chavez has promised to resolve the nagging shortages of groceries like beef, eggs and milk that have sparked long lines in recent months -- a problem business blame on government price controls.

During his weekly Sunday broadcast, Chavez said the subsidiary, called PDVAL, will be a "new instrument for nutritional sovereignty."

"They are going to belong to PDVSA, soon the PDVALs will start appearing, to produce and distribute food," he said.

PDVSA is the principal financier of Chavez's self-styled socialist revolution, dedicating $13 billion to social projects in 2006 -- which critics say has harmed the oil industry of the fourth-largest exporter of oil to the United States.

Chavez did not offer details about how the PDVAL subsidiary would function or how much investment it would require.

In December, he narrowly lost a referendum that would have let him run indefinitely for re-election, and has promised to return to bread-and-butter issues like high crime and inconsistent food supply.

Businesses blame food shortages on strict price controls Chavez created in 2003 that have not kept pace with rampant inflation that reached 22.5 percent in 2007. (Reporting by Brian Ellsworth, editing by Doina Chiacu)