2 May 2012

Bolivia nationalises Spanish power provider

The president of Bolivia nationalises a Spanish-owned electric power company.

Bolivian president Evo Morales

Evo Morales ordered the military to take control of REE, which owns and runs around three-quarters cent of Bolivia’s national grid.

It comes a month after neighbouring Argentina moved to take control of the country’s oil company, YPF, from the Spanish energy company Repsol SA.

Mr Morales did not say how much REE would be compensated, but the Bolivian government’s decree says the state would negotiate a fee.

REE bought 99.94 per cent of shares in TDE in 2002. The remaining 0.06 per cent are in the hands of the Bolivian employees of TDE.

The company owned 74 per cent of Bolivia’s electrical transmission network, or 1,720 miles of power lines, and Mr Morales claimed only $81m had been invested in Bolivia’s power grid since it was privatised in 1997.

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

REE has denied the claims of under-investment by Mr Morales.

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

On May Day two years ago, Mr Morales’ government took control of most of Bolivia’s electrical generation, nationalising its main hydroelectric plants.

One of them, British electricity utility company Rurelec, is currently seeking compensation for the take-over at the Permanent Court of Arbitration in The Hague.

Mr Morales, Bolivia’s first indigenous president, has moved to put energy, water and telecommunications under state control.

Eric Farnsworth, the vice president of the Council of the Americas in Washington said:

“This is a time when Evo is looking to highlight his national project to turn Bolivia over to the people who have been underprivileged.

“It’s crazy to invest in Bolivia and this is a perfect example why.

“The irony is that he’s taking actions that guarantee that investment will dry up further.”