Thu, May 03, 2012 - Page 7 News List

Bolivia’s Evo Morales nationalizes electrical grid

INVESTMENT:Morales said the company that owned the main power grid invested US$81m since 1997, while the government invested US$220m in power generation

AP, LA PAZ

Bolivian President Evo Morales announced on Tuesday that his government is completing the nationalization of Bolivia’s electricity sector by seizing control of its main power grid from a Spanish-owned company.

Morales took advantage of the symbolism of May Day, the international day of the worker, to order troops to occupy installations of the company, a subsidiary of Red Electrica Corporacion SA.

The president’s placing of another of what he deems basic services under Bolivian state control comes as neighboring Argentina moves to take control of the country’s oil company, YPF, from the Spanish energy company Repsol SA, which had held a majority interest.

Spanish Ambassador to Bolivia Ramon Santos told reporters the electric grid takeover “is sending a negative message that generates distrust.”

Red Electrica is the sole operator of the transmission grid in Spain and the Spanish government holds a 20 percent stake in the company.

Morales did not say how much the company would be compensated, but the nationalization decree says the state would negotiate an indemnization fee.

Morales said only US$81 million had been invested in Bolivia’s power grid since it was privatized in 1997.

The government, meanwhile, “invested [US]$220 million in generation and others profited. For that reason, brothers and sisters, we have decided to nationalize electricity transmission,” he said.

Bolivian soldiers peacefully took over the company’s offices in the central city of Cochabamba, hanging Bolivia’s flag across its entry.

The company owned 74 percent of Bolivia’s electrical transmission network, or 2,772km of high-voltage lines.

Two years ago on May Day, Morales’ government took control of most of Bolivia’s electrical generation, nationalizing its main hydroelectric plants.

Analyst Joao de Castro Neves of the Eurasia Group said the president has been far more pragmatic and less radical than the leftist leaders of Venezuela or Argentina.

“He knows his limits,” Castro Neves said. “The Bolivian state doesn’t have the capacity to take over all these sectors [including mining] and maintain the high levels of investment they need.”

He noted that Morales still has not come to terms for taking over several small mines whose nationalization he announced on May Day last year.

Bolivia’s government also has not been able to negotiate compensation for the power plants taken from GDF Suez of France and Rurelec PLC of Britain.

In the case of electricity, the government is following a policy of returning to the public domain a sector privatized during the 1990s.

“Just to make it clear to national and international public opinion, we are nationalizing a company that previously was ours,” Morales said.

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