Bolivia says negotiating takeover of power firms
July 28, 2009 - Reuters

By Diego Ore

LA PAZ (Reuters) - Bolivia's leftist government said Tuesday it had started negotiations to take control of electricity generation companies as it seeks to increase state control over the economy.

President Evo Morales, a close ally of Venezuela's Hugo Chavez, nationalized the Andean nation's key natural gas industry soon after taking office in 2006 and has since taken control of several utility and commodities-related companies.

Several companies have launched legal action over the compensation they were offered as part of the nationalization.

The Energy Ministry said the negotiations aimed to establish the value of leading generation companies but did not say if the government aimed to secure a controlling stake or full ownership.

"These negotiations aim to restore state control to these strategic companies that are part of the electricity generation grid," a ministry statement said.

"Once we have the results of the valuation, the state will start the stage of final negotiations and closing deals," the statement added.

The country's biggest power generators are Corani, Guaracachi and Valle Hermoso. They emerged in the 1990s following the privatization of the state National Electricity Company (ENDE) and account for about half of Bolivia's electricity market.

Corani is 50 percent owned by Inversiones Ecoenergy Bolivia S.A., a subsidiary of France's GDF Suez. Guaracachi is 50 percent owned by Britain's Rurelec PLC ,while Valle Hermoso is run by a foreign private firm called the Bolivian Generating Group.

In each of the three firms, half the shares are held by private investors with the rest held by private retirement funds on behalf of Bolivian pensioners.

Morales referred to possible nationalization of the companies several times last year, but never outlined a takeover plan.

Local radio station Erbol said the leftist leader wanted to take control of the power companies before a Dec. 6 election in which he will seek a second term.

(Additional reporting by Carlos Quiroga; Writing by Helen Popper; Editing by David Gregorio)