Bolivia nationalizes unit of Spanish firm1 min read . Updated: 02 May 2012, 11:13 PM IST
Bolivia nationalizes unit of Spanish firm
La Paz: 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.
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 honour 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, 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% of YPF, are developments that concern foreign investors, and domestic investors as well," said Alberto Ramos, who analyses 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 1,900km of power lines in Bolivia. Red Electrica indirectly holds 99.9% of the firm, which reported net profits of €12.5 million last year, accounting for less than 3% 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 1 May holiday to announce the takeover of petroleum firms 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.