Dec. 31 (Bloomberg) -- Iberdrola SA executives and Bolivian officials are likely to meet soon to discuss compensation for Spain’s largest utility after the nationalization of its Bolivian operations, Energy Minister Juan Jose Sosa said.
Bolivian army and police seized buildings occupied by Iberdrola on Dec. 29, hours after President Evo Morales ordered the nationalization of four business units owned by the company. The South American nation may hold talks next week with Iberdrola in Bolivia’s capital of La Paz, Sosa said.
“I would imagine that next week they’re going to be here,” he said yesterday on a state-controlled radio and television show, according to Agencia Boliviana de Informacion, a state-owned news service. “We’re going to talk, always in a cordial atmosphere, to see in what way we can arrive at a transition that is favorable for both sides.”
Morales has moved to put the telecommunications, energy and water industries under state control since taking power in 2006. In June, the government nationalized the Colquiri tin and zinc mine owned by Glencore International Plc.
As in past takeovers, Bolivian authorities seized several buildings from the Iberdrola units in La Paz, Argentine CN23 TV showed. Employees didn’t oppose their entrance.
“We have been forced to make this decision as we want to have egalitarian electricity rates in rural and urban areas,” Morales said Dec. 29 in a broadcast from the presidential palace.
Iberdrola shares dropped 1.3 percent to 4.08 euros at 9:56 a.m. in Madrid trading, after earlier falling as much as 2.8 percent, the most since Nov. 28.
“Assuming there will be no news of compensation for Iberdrola” the shares will close lower, Gonzalo Sanchez-Bordona, an analyst at Banco BPI SA, said in a telephone interview from Madrid.
The takeover comes seven months after Bolivia expropriated assets of Spain’s Red Electrica Corp., which is still in the process of being compensated by the government.
“This provides, in our view, little hope for Iberdrola to reach a quick agreement,” Sanchez-Bordana said.
The latest seizure follows a series of Spanish company takeovers by Latin American governments, as Argentine President Cristina Fernandez de Kirchner took control of oil company YPF SA when her government seized 51 percent of the company’s shares from Spain’s Repsol YPF SA in April. Venezuelan President Hugo Chavez agreed to pay $1.05 billion to nationalize Banco Santander SA’s local unit in May.
Iberdrola was notified by Bolivia that the government has nationalized its electricity holdings in the South American country, according to spokesman Jose Luis Gonzalez Besada.
“We expect to obtain a fair value from our stakes in the Bolivian companies,” he said in a telephone interview from Madrid yesterday. “We understand it is a political decision and we will kindly and cordially speak with the country’s authorities.”
The units include two electricity distributors, a service company and an investment firm tied to the power business, said a Bolivian government official in a telephone interview from La Paz. He asked not to be identified as he isn’t an authorized spokesman.
Iberdrola should receive compensation after an independent review of its assets within the next six months, Morales said in his television broadcast.
At least 15 companies have been nationalized in Bolivia since 2006.
“Spain laments Bolivia’s government’s decision to nationalize these four businesses, which have Spanish, Argentinian and North American companies among their shareholders,” Spain’s Foreign Affairs Ministry said in a statement sent by e-mail Dec. 29.
Iberdrola’s electricity distributors are the largest in La Paz and the city of Oruro. Only 33 percent of homes in rural Bolivia and 87 percent of urban homes have access to electricity, the Energy Ministry said on its website.
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