Tags: Bolivia | Spanish | Power | Company

Bolivia Nationalizes Unit of Spanish Power Company

Wednesday, 02 May 2012 10:46 AM EDT

Bolivia's leftist President Evo Morales marked May Day on Tuesday by nationalizing the local unit of Spain's Red Electrica, ratcheting up tension between the former colonial power and South American governments eager to assert control over energy resources.

Morales ordered the army to take over the Cochabamba headquarters of the power transmission company known as TDE.

The move came two weeks after Argentina unveiled a plan to take control of the country's No. 1 oil company, YPF, from majority shareholder Repsol, based in Madrid.

Morales said the TDE nationalization stems from the company's lack of investment in Bolivia. Argentina used a similar justification for its takeover of YPF.

"In honor of all Bolivian people who have struggled to recuperate our natural resources and basic services, we are nationalizing Transportadora de Electricidad (TDE)," Morales said during his official address for May Day, also known as International Workers Day.

"Bolivia still needs partners, but not owners," he said after ordering the army to take over TDE's installations. TV images showed armed soldiers controlling access to and from the company's headquarters.

Spain's government, which vowed to halt imports of Argentine biodiesel after the seizure of YPF, had no immediate comment on Tuesday while it evaluated Bolivia's announcement.

"This, and the Argentine nationalization of 51 percent of YPF, are developments that concern foreign investors, and domestic investors as well," said Alberto Ramos, who analyzes Latin America for Goldman Sachs.

"But fortunately this type of event is circumscribed to a small set of countries in the region that are pursuing heterodox economic experiments and that are increasingly less integrated into the global economy," Ramos added.

TDE administers 1,900 kilometers of power lines in Bolivia. Red Electrica indirectly holds 99.9 percent of the company, which reported net profits of 12.5 million euros last year, accounting for less than 3 percent of Red Electrica's 2011 net profits.

Red Electrica officials were not immediately available for comment, but a Spanish government source in Madrid said authorities were in touch with La Paz to discuss technical and diplomatic aspects of the nationalization.

In 2006, Morales used the May 1 holiday to announce the takeover of petroleum companies operating in Bolivia. He later nationalized oil and gas reserves to redistribute wealth to the landlocked country's indigenous majority.

Morales, Venezuelan President Hugo Chavez and Ecuador's President Rafael Correa are leading a push in the region for governments to reclaim control over natural resources.

South America is a major supplier of commodities, particularly for the emerging economies of Asia.

Argentina, one of the world's top grains exporters, is expected on Thursday or Friday to get final legislative approval for the bill allowing the government to take control of YPF. 

© 2024 Thomson/Reuters. All rights reserved.

Wednesday, 02 May 2012 10:46 AM
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