Spain’s Iberdrola Has 4 Units Taken Over by Bolivian State
Bolivian army and police seized buildings occupied by Iberdrola SA (IBE) yesterday, hours after President Evo Morales ordered the nationalization of four business units owned by Spain’s largest utility.
“We have been forced to make this decision as we want to have egalitarian electricity rates in rural and urban areas,” Morales said yesterday morning in a broadcast from the presidential palace.
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. (GLEN)
As in past takeovers, Bolivian authorities seized several buildings from the nationalized Iberdrola units in Bolivia’s capital of La Paz, Argentine CN23 TV showed. Employees didn’t oppose their entrance.
Iberdrola was notified by Bolivia that the government has nationalized its electricity holdings in the South American country, spokesman Jose Luis Gonzalez Besada said in a telephone interview. He declined to comment further.
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.
“Even as those businesses represent a tiny part of Iberdrola’s revenue and the impact is very limited, Iberdrola has to defend itself through international law in order to get a fair value for the assets,” Francisco Salvador, a Madrid-based strategist at FGA/MG Valores, said by phone today. “In the end, the real loser from such a move is the government as it damages its credibility.”
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 yesterday.
“The Spanish government hopes the process of evaluating the value of the nationalized company is carried out with strict objectivity criteria that allow to set up a fair compensation to which shareholders have the right without unnecessary delays,” it said.
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.
Agence France-Presse earlier reported the nationalization.
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