Bolivia expropriates energy subsidiaries

AP and AFP, LA PAZ, Bolivia

Mon, Dec 31, 2012 - Page 15

Bolivian President Evo Morales nationalized the Bolivian electricity distribution subsidiaries of the Spanish energy company Iberdrola in a public ceremony on Saturday.

Morales issued a decree allowing the takeover of shares in Empresa de Electricidad de La Paz (Electropaz) and Empresa de Luz y Fuerza de Oruro (Elfeo), which supply energy in this Andean nation.

Soldiers guarded the installations of the electricity distribution companies, marked with signs reading: “Nationalized.”

In the ceremony at Bolivia’s government palace, Morales also announced the expropriation of an investment management company and a service provider belonging to the Spanish energy giant.

Morales said he had “been forced to take this step” to ensure that electric service rates remain “equitable” in the regions of La Paz and Oruro.

The Spanish government said in a statement that it regretted Bolivia’s decision to nationalize companies that included “Spanish, Argentine and American companies among its shareholders.”

Spain said it hoped “the process of assessing the value of the nationalized company is done with high standards of objectivity that would establish the just compensation to which shareholders are entitled.”

Iberdrola said it hopes Bolivia will pay “a fair price” for the utilities nationalized by La Paz.

“We hope we will get the real value of our share” in the expropriated companies, an Iberdrola spokesman said in Madrid. He did not say how much the Spanish company expected to be paid or whether an estimate had already been made.

Quoting market sources, the Spanish press estimated Iberdrola’s share in the utilities in Bolivia at US$100 million.

The decree read by Morales calls for Iberdrola to receive indemnification after an independent firm is hired within 180 days to determine the value of the nationalized shares.

It was the latest in a series of such seizures by the outspoken leftist who is a key member of a group of populist South American presidents led by the now-ailing Hugo Chavez of Venezuela.

In May, Morales nationalized Transportadora de Electricidad belonging to Spanish company Red Electrica Corporacion, which controlled 74 percent of energy transmission in Bolivia.

In his first year in office in 2006, the Bolivian president nationalized the oil industry through a renegotiation of contracts with a dozen oil companies, including Spain’s Repsol, Petrobras of Brazil, Argentina’s PanAmerican, British Petroleum and Total of France.

In 2009 Morales transferred to state control the country’s largest telephone operator, which had been controlled by Italy’s ETI, and in 2010 he did the same with the four largest power generators, which had belonged to French-owned Suez, Rurelec of Britain and Bolivian shareholders.

This time, Morales said he was acting because Iberdrola charged more for electricity in rural areas than it did in cities, and service was also uneven.

“We are forced to take this measure so that utility rates will be uniform” and service will be of the same quality in the country as in urban areas, the president said during a ceremony at the presidential palace.