Bolivia takeover: Spain dismayed by TDE nationalisation

Military police stand guard outside TDE in Cochabamba Mr Morales said he had ordered the military to take control of REE in the name of the Bolivian people

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Spain's economy minister has expressed disappointment with Bolivia's nationalisation of a Spanish-owned electric power company.

Luis de Guindos warned it could deter investment, but also stressed Bolivia had agreed to pay compensation.

The European Commission said the move sent a "negative signal" to investors.

President Evo Morales ordered the takeover of REE's Bolivian subsidiary on Tuesday, saying it had not invested enough in Bolivia.

Mr Guindos responded by saying that TDE (Transportadora de Electricidad) had been providing Bolivians with a "good service".

The company owns and runs around three-quarters of Bolivia's power grid.

"The Spanish government does not like such decisions, because they fail to provide legal security for Spanish capital investment in countries like Bolivia," Mr Guindos said.

Analysis

Evo Morales' claim that TDE's Spanish owners had not invested enough money in Bolivia was strikingly similar to the remarks of his Argentine counterpart Cristina Fernandez de Kirchner two weeks ago, when she announced that her government was taking over the Spanish firm Repsol's majority stake in the energy company YPF.

However the commercial and strategic value of TDE, which manages a large part of Bolivia's electricity network, does not compare with that of YPF. Analysts reckon the Argentina-based energy company is worth somewhere in the region of $25-35bn (£15-22bn).

That, at least in part, explains why the language coming from Spain's government in relation to the Bolivian case has, so far, been markedly different to its reaction to the YPF takeover.

Today, Spain's economy minister expressed unease at the move, but his comments were measured. Luis de Guindos was keen to underline that Bolivia had promised to pay REE a decent price for TDE.

Interestingly, President Morales' announcement on his plan to nationalise TDE came just hours before he and the boss of Spain's Repsol opened a natural gas plant in the south of Bolivia.

Spain will be keen to protect other commercial interests in the country and the continent. It is playing down comparisons between the Bolivian and Argentinian cases.

The European Commission's trade spokesman, John Clancy, also voiced concern at the Bolivian government's decision.

"Actions like this one necessarily send a negative signal to international investors over the business and investment climate in Bolivia," he said.

However, Mr Guindos stressed that the case was "very different" from Argentina's decision last month to nationalise the oil firm YPF, in which Spanish company Repsol had a controlling stake.

He did not elaborate, but according to Spanish daily newspaper ABC the damage to REE will be far smaller than that inflicted on Repsol by the nationalisation of YPF.

'Negative'

"They are independent situations," Mr Guindos said. "These are decisions which are essentially negative for the countries that take them, for the governments that take them."

"They have medium-term implications in terms of these countries' economic development and for the security of investments, which are vital."

Argentina's move prompted an angry response from Spain and the European Union.

The EU's Trade Commissioner Karel de Gucht said the consequences for Argentina's economic development would "be felt for a long time to come".

President Morales announced the takeover of TDE at a May Day ceremony.

"In honour of all Bolivian people who have struggled to recuperate our natural resources and basic services, we are nationalising Transportadora de Electricidad (TDE)," he said.

Mr Morales did not say how the Spanish power company would be compensated, but in his decree he stipulated that the state would negotiate a payout with REE.

Both Mr Guindos and the European Commission said they would be keeping a close eye on whether Bolivia honoured its promise to compensate the firm.

REE bought 99.94% of shares in TDE in 2002. The remaining 0.06% are in the hands of the Bolivian employees of TDE.

TDE's nationalisation is the latest in a series of expropriations decreed by President Morales.

On May Day 2010, he expropriated four power-generating companies.

One of them, British electricity utility company Rurelec, is currently seeking compensation for the takeover at the Permanent Court of Arbitration in The Hague.

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