We study dielectric properties of metallic systems using a modified Pariser-Parr-Pople model in the single determinant approximation. Our model does not invoke extra screening; it describes long-range coulomb interaction exactly and approximates and neglects only the short-range exchange and correlation effects. We show that in metallic systems this long-range coulomb interaction leads to spatial localization of electronic orbitals over several atoms, different from orbital localization on single atoms in Mott insulators. We speculate that such localization is also important for the description of metallic transport properties based on Hartree-Fock or Kohn-Sham density functional theory formalisms. (C) 2002 Elsevier Science B.V. All rights reserved.