Bolivia nationalizes unit of Spain's Red Electrica

Reuters News
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Posted: May 01, 2012 5:23 PM
Bolivia nationalizes unit of Spain's Red Electrica

By Carlos Quiroga

LA PAZ (Reuters) - Bolivia is nationalizing the local unit of Spain's Red Electrica, President Evo Morales said on Tuesday, ratcheting up tension between Spain and South American governments eager to assert control over their energy resources.

Argentina last month unveiled a plan to take control of the country's No. 1 oil company, YPF, from majority shareholder Repsol, based in Madrid.

Bolivia has already nationalized wide swaths of its oil and gas sector. Leftist leader Morales said the expropriation of the Red Electrica unit, a power transmission company known as TDE, stems from the company's lack of investment in Bolivia. Argentina used a similar justification for its takeover of YPF.

Spain, which vowed to halt imports of Argentine biodiesel after the seizure of YPF, was still evaluating Tuesday's announcement by Bolivia. TDE administers 1,900 kilometers of power lines in Bolivia.

"This, and the Argentine nationalization of 51 percent of YPF, are developments that concern foreign investors, and domestic investors as well," said Alberto Ramos, who analyzes 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.

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 honor 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 an address marking Workers Day.

"Bolivia still needs partners, but not owners," he said in an address hours later, after ordering the army to take over TDE's installations. TV images showed armed soldiers controlling access to the company's headquarters.

Red Electrica indirectly holds 99.9 percent of Cochabamba-based TDE. The unit reported net profits of 12.5 million euros last year, or less than 3 percent of Red Electrica's 2011 net profits.

In 2006, Morales used the May 1 holiday to announce the takeover of petroleum companies 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.

Argentina, one of the world's top grains exporters, is expected on Thursday or Friday to get final legislative approval for the bill allowing the government to take control of YPF. [ID:nL2E8FQ07S]

(Reporting By Carlos Quiroga in La Paz and Carlos Ruano and Paul Day in Madrid; writing by Hugh Bronstein; Editing by Lisa Von Ahn, Phil Berlowitz, John Wallace and David Gregorio)