Tue, Jan 01, 2013 - Page 15 News List

Iberdrola, Bolivia to meet on seizure of businesses

Bloomberg

Iberdrola SA executives and Bolivian officials are likely to meet soon to discuss compensation for Spain’s largest utility after the nationalization of its Bolivian operations, Bolivian Energy Minister Juan Jose Sosa said.

Bolivian army and police seized buildings occupied by Iberdrola on Saturday, hours after Bolivian President Evo Morales ordered the nationalization of four business units owned by the company.

The South American nation may hold talks next week with Iberdrola in Bolivia’s capital of La Paz, Sosa said.

“I would imagine that next week they’re going to be here,” he said on Sunday on a state-controlled radio and television show, according to Agencia Boliviana de Informacion, a state-owned news service.

“We’re going to talk, always in a cordial atmosphere, to see in what way we can arrive at a transition that is favorable for both sides,” he said.

Morales has moved to put the telecommunications, energy and water industries under state control since taking power in 2006.

In June, the government nationalized the Colquiri tin and zinc mine owned by Glencore International PLC.

Iberdrola was notified by Bolivia that the government has nationalized its electricity holdings in the South American country, spokesman Jose Luis Gonzalez Besada said.

“We expect to obtain a fair value from our stakes in the Bolivian companies,” he said in a telephone interview from Madrid on Sunday.

“We understand it is a political decision and we will kindly and cordially speak with the country’s authorities,” he said.

The units include two electricity distributors, a service company and an investment firm tied to the power business, a Bolivian government official said in a telephone interview from La Paz.

“Even as those businesses represent a tiny part of Iberdrola’s revenue and the impact is very limited, Iberdrola has to defend itself through international law in order to get a fair value for the assets,” Francisco Salvador, a Madrid-based strategist at FGA/MG Valores, said by telephone.

“In the end, the real loser from such a move is the government as it damages its credibility,” he added.

At least 15 companies have been nationalized in Bolivia since 2006.

Iberdrola’s electricity distributors are the largest in La Paz and the city of Oruro. Only 33 percent of homes in rural Bolivia and 87 percent of urban homes have access to electricity, the Energy Ministry said on its Web site.

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