The Spanish government and Spain-based power utility Red Electrica de España say they expect President Evo Morales’ administration will provide fair compensation for the REE unit nationalized by Bolivia, a move officials in Madrid say is not linked to Argentina’s expropriation of oil firm YPF.
Economy Minister Luis de Guindos, speaking on behalf of Prime Minister Mariano Rajoy’s administration, said Wednesday that Spain will monitor the situation to ensure REE is reimbursed for its investments in Bolivia.
“The Spanish government does not like these types of decisions” but it does not see a link between this case and Argentina’s April 16 announcement of plans to expropriate a controlling 51 percent stake in oil firm YPF from Spanish energy giant Repsol, the minister said.
Spain has repeatedly slammed that latter decision as arbitrary and hostile.
“We don’t think there’s a generalized situation in any way. They’re independent situations,” De Guindos said Wednesday in Brussels.
The nationalization of REE unit Transportadora de Electricidad, announced by Morales during a May Day event, took Madrid and the Spanish utility by surprise.
Bolivian Energy Minister Juan Jose Sosa, however, said Wednesday he informed the Spanish government that Bolivia will take into account whatever investments REE made in its nationalized unit.
Sosa told ATB television that he spoke with Spanish Industry Minister Jose Manuel Soria on “quite friendly” terms about the takeover.
REE, for its part, said Wednesday it hopes to reach an “amicable agreement” with the Bolivian government on fair compensation for its 99.94 percent stake in the expropriated company.
TDE owns and operates the main Bolivian power grid, which supplies 85 percent of the domestic market for electricity.
The compensation process must conform to international legal principles, REE said, noting that the fact its operations in Bolivia “were audited annually” by regulators and global accounting firms should lend transparency to any negotiation.
It also recalled that it invested more than $74 million in Bolivia between 2002 and 2011, $69 million of which were spent on the local electrical distribution network.
Another $14 million invested in projects begun prior to 2002 must be added to that total, bringing total investment to more than $88 million, nearly equal to the $91 million the company paid for TDE, REE said.
REE’s stake in TDE will pass to state-owned Empresa Nacional de Electricidad, Morales said Tuesday, justifying the nationalization by pointing to what he described as the Spanish company’s inadequate investment in its Bolivian operations.
The leftist president pledged, however, to provide fair compensation to REE.
“We are responsible with the companies,” he said Tuesday afternoon from TDE’s headquarters in the central Bolivian city of Cochabamba, where he traveled after making the initial announcement in La Paz.
“If a company has made investments, we acknowledge the investment and we will always acknowledge the investment,” the president told TDE employees, soldiers and government supporters.
La Paz nationalized four electricity producers in 2010, including subsidiaries of French giant GDF Suez and Britain’s Rurelec.
In contrast to its relatively subdued reaction to the Bolivian government’s takeover of TDE, Spain’s conservative government has blasted Argentina’s expropriation of YPF since it was announced on April 16 and has retaliated by announcing plans to limit imports of Argentine biodiesel.
The Iberian nation also has said it will pursue “measures of a diplomatic nature” in various international forums to respond to the seizure.
Like Bolivia, Argentina justified its nationalization of YPF by pointing to a lack of investment by the parent company.
Large corporations such as Repsol, Iberdrola, Abertis and Aena are among the Spanish companies with operations in Bolivia.
In a ceremony Tuesday at the Margarita gas field, Morales joined Repsol Chairman and CEO Antonio Brufau to inaugurate a gas-processing plant built by a consortium led by the Spanish company and praised the multinational and its boss.
“I want to salute Repsol’s CEO. His presence, his effort, his work, as partners,” the president said at the ceremony just hours after announcing the nationalization of the REE unit.
“I recognize and we recognize the leadership of Repsol, one of the world’s largest international companies, and its investments always will be respected as a partner,” Morales added to applause.
Morales, the first indigenous president of Indian-majority Bolivia, has used previous May Day observances to announce similar moves to assert public control over the Andean nation’s resources and basic services.
The largest move was a takeover of Bolivia’s natural gas sector, which involved requiring foreign energy companies to become minority partners in joint ventures with state-owned YPFB.