Economy Minister Luis de Guindos said Wednesday that the Spanish government had received assurances from Bolivia that Red Eléctrica de España (REE) would be fairly compensated for the seizure of its entire electricity transmission grid, Transportadora de Eléctricidad.
“The Spanish government does not like this type of decision because we believe it is essential to uphold legal security in the investment process in countries such as Bolivia,” De Guindos told state broadcaster TVE from Brussels, where he was attending a European finance ministers meeting. “What Bolivia has guaranteed is that it will compensate the company for its investment costs in the electricity grid.”
Bolivia’s hydrocarbons minister, Juan José Sosa, confirmed on Wednesday that Bolivia would negotiate with Red Eléctrica the recognition of the investments it had made in the country.
"We respect the sovereign decision of the Bolivian government on the structure of the electricity sector of the company, provided that this process complies with the principles of international law,” Red Eléctrica said. “We trust we will reach an amicable agreement with the Bolivian government to set a fair price.”
The European Commission on Wednesday expressed concern about the nationalization, saying it sent a “negative signal” to international investors and called on the Morales government to negotiate fair and rapid compensation.
Red Eléctrica acquired Transportadora de Eléctricidad in 2002 for 92 million euros and has invested $60 million since then. President Evo Morales justified the nationalization of the company because of its poor investment record, which, he said, amounted to only $5 million a year since 1996. Argentina used the same argument last month to seize 51 percent of YPF held by Spanish oil firm Repsol.
In a statement to the National Securities Commission, Red Eléctrica said Transportadora de Eléctricidad accounted for only 1.5 percent of its revenues. “This development does not have a significant impact on [our] business and earnings,” the Spanish firm said.
Spanish brokerage Banesto Bolsa said Red Eléctrica had already recognized impairment charges of 84 million euros in its investment in Transportadora de Eléctricidad.
Red Eléctrica’s shares were down almost 4 percent in late afternoon trading. The Spanish government holds a 20 percent stake in the company.