Bolivia nationalizes four power companies

LA PAZ (Reuters) – Leftist Bolivian President Evo  Morales said yesterday he had nationalized four power  companies, including a subsidiary of France’s GDF Suez, in his  drive to tighten state control over the impoverished economy.

Morales, a close ally of Venezuela’s Hugo Chavez,  nationalized Bolivia’s key natural gas industry soon after  taking office in 2006 and has since taken control of several  utility companies as well as the Andean nation’s biggest  smelter and top telecommunications firm.

“We’re here … to nationalize all the hydroelectric plants  that were owned by the state before, to comply with the new  constitution of the Boli-vian state. Basic services cannot be a private business. We’re recovering the energy, the light, for  all Bolivians,” he said in the central Cochabamba region.

Morales said the state now controls 80 per cent of  electricity generation in Bolivia and was aiming for complete  government control over the sector.

The decree read aloud by presidential spokesman Ivan  Canelas said the state was taking control of the stakes that  private investors held in four power companies, including  Corani, Guaracachi and Valle Hermoso, the country’s biggest generating companies.

They emerged in the 1990s following the privatization of  the state National Electricity Company (ENDE) and account for  about half of Bolivia’s electricity market.

Corani is 50 per cent owned by Inversiones Econergy Bolivia  SA, a subsidiary of France’s GDF Suez.

Guaracachi is 50 per cent owned by Britain’s Rurelec PLC,  while Valle Hermoso is run by a private Bolivian firm called  the Bolivian Generat-ing Group.

In Corani, Guaracachi and Valle Hermoso, half the shares  were held by private investors with the rest held by the  Bolivian state.

The fourth power company nationalized yesterday was  ELFEC, which supplies the central Cochabamba region and is  controlled by workers and Bolivian investors.

Bolivia at odds with investors

Morales said the Bolivian government tried, but failed, to  convince investors to sell the shares the state needed to have  a controlling stake.

“It’s the state’s obligation to compensate investors for  their assets. … We made an effort to reach an agreement with  the private, multinational companies, but they were unwilling to reach an accord,” said Morales.

Rurelec said it was “very disappointed” Morales had decided  to nationalize its assets in Bolivia.
“We’re disappointed because Rurelec is third largest  British investor in Bolivia. And since 2006, when Evo became  president, we have invested more than $110 million in new power  plant capacity,” said Rurelec CEO Peter Earl.

A GDF Suez spokesperson said in Paris the company “always  respects the legislation of the country where it is active  while defending its interests as a company.”

Several companies have launched legal action over the  compensation they were offered as part of Morales’  nationalization drive.

Argentina-based Pan American Energy recently filed a  complaint against Bolivia at a World Bank arbitration tribunal,  regarding the nationalization of its Bolivian subsidiary in  early 2009.

Morales likes to celebrate May 1, known as May Day or  International Workers’ Day, by nationalizing companies  controlled by foreign investors.

On May Day last year, he nationalized Air BP, a division of  British oil major BP Group and the same day in 2008 he took  over Entel, the country’s largest telecommunications company,  until then controlled by Euro Telecom International, a unit of  Telecom Italia.

Morales, the country’s first indigenous president and a  self-declared anti-capitalist, took office for a second term in  January pledging to diversify the economy from its dependence  on natural gas and mining exports and to launch state-run  paper, cement, iron and lithium companies.

His efforts to give the state more control over the economy  are very popular with Bolivia’s indigenous majority, who say  foreign companies have ransacked the country’s natural  resources and invested little to help the poor.

Critics say Morales, 50, has scared away crucial foreign  investment with nationalizations of companies and is not acting  on behalf of all Bolivians but primarily for Aymara and Quechua  Indians and other indigenous groups.

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