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article imageBolivia takes state control of Spanish power company subsidiaries

By Robert Myles     Dec 30, 2012 in Business
La Paz - Bolivian President Evo Morales yesterday announced the nationalization of utility companies owned by Spanish based energy group Iberdrola, the latest in a series of nationalizations of key Bolivian industries.
Yesterday's moves by the socialist Bolivian President Evo Morales to bring under state control four subsidiaries owned by Spanish multinational Iberdrola were the most recent in a string of nationalizations by Bolivia's left wing government affecting some of the impoverished South American republics's key industries.
The announcement was made at press conference by President Morales yesterday at the Presidential Palace in La Paz. According to Bolivian government sources, President Morales, who was accompanied by Vice President Álvaro García Linera and Hydrocarbons and Energy Minister, Juan Jose Sosa, said,
"We have been forced to take this step for electric service rates are equitable in the departments of La Paz and Oruro and quality of electricity service is uniform in rural and urban areas,"
Previously, President Morales, leader of Bolivia’s Movimiento al Socialismo-Instrumento Político por la Soberanía de los Pueblos (Movement for Socialism-Political Instrument for the Sovereignty of the Peoples, usually shortened to MAS), had taken steps to bring telecommunications, energy and water companies under Bolivian state control since he came to power in 2006.
In June this year, Bolivia’s socialist government nationalized the Colquiri tin and zinc mine which was part of multinational Glencore International Plc, reports Bloomberg, whilst power transmission company Transportadora de Electricidad (TDE), which formed part of Spain’s Red Electrica de España group, was taken into public ownership in spring 2012, according to La Tribune.
On Saturday, Morales again demonstrated that Spanish origins would not exempt any company from the ambit of Bolivian state control when a decree was signed concerning Empresa de Electricidad de La Paz (Electropaz) and Empresa de Luz y Fuerza de Oruro (Elfeo), both energy supply companies controlled by the Spanish giant Iberdrola as well as two smaller units, Compañía Administradora de Empresas Bolivia (CADEB) and Empresa de servicios eléctricos (EDESER).
The re-establishment of public ownership of electricity transmission and supply companies in Bolivia puts into reverse a process of privatization and unbundling which started in the early 1990s. Despite almost a quarter of a century of privately operated electricity transmission, distribution and retail, rural Bolivia still has one of the lowest rates for electricity coverage in South America.
As was the case with previous nationalizations in Bolivia, Bolivian authorities peacefully took control of several buildings associated with Iberdrola’s Bolivian operations.
Morales also announced that the state controlled national electricity company Empresa Nacional de Electricidad (ENDE) would be directed to pay compensation to Iberdrola within 180 days from the coming into force of yesterday’s presidential decree. The amount of compensation would be assessed by independent assessors engaged by ENDE.
With the exception of executive appointments, the rights of existing employees of Electropaz, Elfeo, CADEB and EDESER are unaffected by the electricity re-nationalization. President Morales also added that the nationalization of the electricity companies in La Paz and Oruro would not affect the quality and continuity of service of electricity distribution. He also said the current inequalities in pricing between consumers in urban and rural areas would be abolished.
In concluding, President Morales said the re-nationalization of Bolivian electricity supply and distribution formed part of the socialist party’s Bicentennial Agenda and that the measure was aimed at eliminating current inequalities amongst Bolivia’s electricity consumers and providing a universal service.
More about Iberdrola, spanish electricity companies, Evo morales, president of Bolivia, bolivian politics
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