Bolivia nationalises power company on May Day

Federico Fuentes

Bolivian President Evo Morales once again used the opportunity of May 1, the international workers’ day, to announce his left-wing government's latest nationalisation. This time, it was the turn of Transportadora de Electridad (TDE), a subsidiary of the Spanish-owned Red Electrica de Espana (REE), which controlled Bolivia’s national electricity transmission grid.

The nationalisation was another step towards meeting the long-standing demand of the Bolivian people to return privatised companies to state hands.

It was also implemented in line with the new constitution, approved by the people in 2009. The constitution states that all Bolivians have the right to access basic services and grants the state the ability to intervene into any strategic sector of the economy in order to ensure the peoples’ quality of life.

In 1997, Bolivia’s state-owned electricity transmission company was privatised as part of the neoliberal offensive to auction off the nation’s private assets to foreign transnationals.

The Spanish-owned Union Fenosa bought the company for US$39.9 millio. But within six months it had reassessed the value of the company at $74 million dollars, despite not a single extra dollar being invested in the company.

In 2002, REE purchased the company for $88.3 million and proceeded to rake in profits while bringing little benefits to Bolivia’s population. This included the failure to incorporate one-third of Bolivia’s departments (states), which were excluded from the national electricity grid.

Despite investing as little as $2.8 million in 2010, REE generate some $60 million in revenue in 2011.
In comparison, the Morales government has invested more than $200 million into the electricity sector. This has enabled the integration of the department of Beni into the national grid, with Tarija’s incorporation soon to be completed.

This leaves Pando as the final link towards establishing a comprehensive national grid.

During the ceremony to announce the nationalisation, the Minister of Hydrocarbons and Energy Juan Jose Sosa stated that the government was committed to investing a further $200 million in transmission projects over the next two years to ensure that the national grid would incorporate all nine departments.

This latest nationalisation follows on from that of three electricity generation companies in 2010. All these previously privately owned companies are once again under the control of the state-owned Empresa Nacional de Electricidad (ENDE).

It is also in line with other nationalisations such as those carried out in the area of gas, oil and telecommunications, that have sought to return natural resources and strategic sectors of the economy into state hands.

These moves have been fundamental to explaining three key changes that have occurred in Bolivia.
Firstly, the rise in government revenue generated through state greater control has underpinned the dramatic shift of wealth towards the poor majority.

As a result, the level of poverty had fallen from 60% in 2005 to 49.6% in 2010. The gap between the richest 10% and poorest 10% shrunk from 128 times more wealth to 60 times.

Secondly, the state-owned companies have been reorientated away from pursuing profit towards ensuring Bolivians have greater access to basic services. In the electricity sector this has meant the percentage of rural households with access to electricity has jumped from 20% to 50%.

Finally, greater state control and higher revenue has allowed the government to go beyond simply meeting short-term needs and starting to implement a long-term plan that seeks to place people and the environment first.

The electricity sector is a good example. Despite sitting upon Latin America’s second-largest gas reserves, the Bolivian government has set itself the objective of meeting 75% of the populations electricity needs through alternative energy sources by 2015.

Already in place are more than 40,000 photovoltaic systems providing solar energy to small rural communities and more than 60 small-scale hydroelectric dams.

In April, Vice-Minister for Electricity and Alternative Energies Miguel Fernandez announced that a further S$40 million would be ploughed in solar, wind, geothermal, small-scale hydro and biomass electricity initiatives throughout the next three years in order to make this goal a reality.

Republished from Green Left Weekly