Bolivia Extends Nationalization Push
May 2, 2010 - Wall Street Journal


Bolivia's government on Sunday issued a decree taking control of a small antimony plant owned by Switzerland's Glencore International AG, according to local media reports.

The move came a day after President Evo Morales issued executive decrees nationalizing three power companies and a power distributor, in the latest step toward wider state control over the country's providers of basic services.

"From now on the Vinto-Antimonio plant reverts to the domain of the state," said Presidency Minister Oscar Coca, quoted by the Erbol news agency. "In recent years there's been a lack of production at this plant. It is practically being dismantled."

The leftist president chose the May 1 International Workers' Day holiday to announce the takeover of the Corani SA, Guaracachi SA and Valle Hermoso SA electricity generators.

Evo Morales
"We're taking back light for all Bolivians, and the state now controls over 80% of all the energy produced in Bolivia. Sooner or later, the state will have to control and administer 100% of the energy," Mr. Morales said, according to local press reports.

On Friday, Mr. Morales visited Venezuela, where he signed a number of natural-gas and trade accords with socialist leader Hugo Chávez, who himself has ordered a string of major nationalizations in Venezuela.

Each of the Bolivian power companies had been 50% owned by the state, with the other halves held by Ecoenergy International, a subsidiary of France's GDF Suez SA, U.K.'s Rurelec PLC , and the Bolivian Generating Group controlled by Argentina's Pan American Energy LLC.

Power distributor Empresa de Luz y Fuerza de Cochabamba, or Elfec, was also nationalized. The company had been run by a workers cooperative.

"We're complying with the demand from the people to recover and nationalize the natural resources and basic services that were the state's before," Mr. Morales said.

Bolivia has expanded state control over its natural resources since Mr. Morales's 2006 election. He has nationalized or raised taxes on oil, natural gas, mining and telecommunications, and the trend is likely to continue after Mr. Morales's landslide re-election in December.

"Basic services can't be a private business," Mr. Morales said, pointing out that these principles were enshrined in the country's new constitution.

At least one of the companies quickly denounced the takeover.

"This surprise move was taken in the face of assurances given to the British and French ambassadors in La Paz at the end of last week that the Morales Administration continued to want to maintain European private investment in the power sector," Rurelec said in a news release.

A GDF Suez spokeswoman said Sunday that the company "always respects the legislation of the country where it is active while defending its interests as a company," adding that Corani is GDF Suez's only asset in Bolivia.

—Patricia Kowsmann contributed to this article