NYT – Following Argentina, Bolivia Seizes Local Assets of Spanish Utility

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Published: May 1, 2012

MADRID — Bolivia on Tuesday seized control of the assets there of Red Eléctrica de España, a Spanish utility, a decision that the country’s president, Evo Morales, said was part of broader efforts to regain ownership of Bolivia’s natural resources and basic services.

The expropriation of Transportadora de Electricidad, or T.D.E., which operates a large part of Bolivia’s national electricity grid, is another abrupt setback for Spanish companies in Latin America, just weeks after President Cristina Fernández de Kirchner of Argentina announced that her government would take back majority control of YPF, an oil company, from Repsol, its Spanish parent.

Mr. Morales made his announcement from the government palace in La Paz during a May Day celebration only hours before he was to travel to southern Bolivia to inaugurate Repsol’s new natural gas plant there. He said the nationalization of T.D.E. was “a worthy homage to the workers and Bolivian people who have been fighting to get back natural resources and basic services.”

Mr. Morales said the expropriation was justified because Red Eléctrica had failed to invest sufficiently to develop its business in Bolivia, an argument the Kirchner government used against Repsol. Mr. Morales argued that Red Eléctrica had invested only $81 million in T.D.E. since it acquired the company in 2002. Mr. Morales said he had signed a decree to nationalize the company and ordered Gen. Tito Gandarillas, the commander of the armed forces, to immediately take over the management and assets of T.D.E. “on behalf of the Bolivian people.”

T.D.E. operates about 2,000 kilometers, or 1,250 miles, of electricity transmission lines across Bolivia. Neither the Spanish company nor the government in Madrid had an immediate response to Bolivia’s decision.

Since coming into office in early 2006, Mr. Morales has expropriated the local assets of other foreign investors, including those of GDF Suez, a French utility.

The turmoil in Latin America comes at a particularly difficult time for Spanish companies, which have grown increasingly reliant on earnings from the region to offset falling revenue in their home country, where unemployment has climbed to 24.4 percent.

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One thought on “NYT – Following Argentina, Bolivia Seizes Local Assets of Spanish Utility

  1. newsofthetimes

    Wow. It will be interesting to see what this will do to the economies of these countries. It seems to me that this move is going to really scare investors. I am less familiar with the Bolivian economy, but I know that this is going to have significant negative impacts for Argentina. Thanks for the post!

    Reply

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