Bolivia Nationalizes Two Spanish Electricity Distribution Companies

In an effort to assert control over national resources Bolivia has nationalized two Spanish electricity distribution companies. The measure on the eve of New Year – 2013 – comes up as an example of initiatives to secure interest of people.

Carlos Quiroga, Sonya Dowsett, Blanca Rodriguez and Hugh Bronstein reported [1]:

Bolivia nationalized two electricity distribution companies owned by Spanish utility Iberdrola on December 29, 2012, the latest move by leftist President Evo Morales to assert control over the country's resources.

Iberdrola will be compensated according to a valuation to be drawn up by an independent arbiter, Morales said, adding that the measure was aimed at enhancing rural energy services.

"We considered this measure necessary to ensure equitable energy tariffs ... and to see to it that the quality of electricity service is uniform in rural as well as urban areas," Morales said.

Morales has nationalized oil, telecommunications, mining and electrical generation companies.

In June, Morales took control of global commodities giant Glencore's tin and zinc mine in Bolivia and more nationalizations of mining companies could be ahead in the Andean country.

Iberdrola, whose office in capital city La Paz was being guarded by police on December 29, has operated in Bolivia since the late 1990s. An Iberdrola spokesman said the company was studying the situation and declined to comment further.

Spain regretted Bolivia's actions, the Spanish Ministry of Foreign Affairs said in a statement, adding the government hoped the shareholders of the companies involved would be fairly compensated.

"This decision by the Bolivian government involves companies that carried out the public service of distributing electricity that have never belonged to the Bolivian state," the statement said.

The Iberdrola units are Electropaz, which supplies around 470,000 customers in the cities of La Paz and El Alto; and Elfeo, which supplies over 80,000 customers in the city of Oruro.

The nationalization also includes two small suppliers owned by Iberdrola, which provide services to the distributors.

In 2006, Morales announced 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.
Iberdrola is not the first Spanish company to have its assets seized in Latin America.

Bolivia decided to nationalize a power transmission unit of power grid operator Red Electrica in May, just weeks after Argentinian President Cristina Fernandez seized YPF , the country's biggest energy company, accusing oil major Repsol of underinvesting at the unit.

The World Bank's arbitration body has agreed to begin an arbitration process on the Repsol case.

Another report [2] from La Paz, Bolivia said:

In a public ceremony, Morales issued a decree allowing the takeover of shares in Empresa de Electricidad de La Paz (Electropaz) and Empresa de Luz y Fuerza de Oruro (Elfeo), which supply energy in this Andean nation.

Soldiers guarded the installations of the electricity distribution companies, marked with signs reading: “Nationalized.”

In the ceremony at Bolivia’s government palace, Morales also announced the expropriation of an investment management company and a service provider belonging to the Spanish energy giant.

Morales said he had “been forced to take this step” to ensure that electric service rates remain “equitable” in the regions of La Paz and Oruro.

Spain said it hoped “the process of assessing the value of the nationalized company is done with high standards of objectivity that would establish the just compensation to which shareholders are entitled.”

Telephone calls and emails seeking comment from Iberdrola in Spain were not immediately answered.

The decree read by Morales calls for Iberdrola to receive indemnification after an independent firm is hired within 180 days to determine the value of the nationalized shares.

In 2009 Morales transferred to state control the country’s largest telephone operator, which had been controlled by Italy’s ETI, and in 2010 he did the same with the four largest power generators, which had belonged to French-owned Suez, Rurelec of Britain and Bolivian shareholders.


[1] Reuters, “UPDATE 3-Bolivia nationalises Iberdrola electricity companies”, Dec 29, 2012, 

[2] The Washington Post/ AP, “Bolivian president expropriates electricity distribution subsidiaries of Spain’s Iberdrola”, Dec 29, 2012,

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