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Bolivian President sends in army to seize control of energy industry
The dramatic Labour Day decision by the Bolivian President Evo Morales to nationalise the energy industry has alarmed the Brazilian and Spanish governments and could scare off the very investment and expertise Bolivia needs to turn its vast natural resources into wealth for its poor.
Mr Morales, an indigenous former coca farmer who has vowed to stop foreign companies cashing in while indigenous people scrape a living in South America's poorest country, had long promised to take over oil and gas companies but had not yet delivered on his populist promise.
His sudden decision to send troops to guard dozens of plants, refineries and pipelines and give foreign companies including Brazil's Petrobras, Spain's Repsol-YPF, BP and British Gas and Total of France six months to renegotiate their contracts or get out, signalled a tougher stance as he marks 100 days in office. And it underlined a growing affinity with the Venezuelan President, Hugo Chavez, who has also cracked down on foreign firms.
Though a tiny, landlocked country, Bolivia is an energy powerhouse with the second-largest gas reserves in South America behind Venezuela. Neighbouring countries rely heavily on its gas exports, and prices can now be expected to rise.
Brazil's President Luiz Inacio Lula da Silva called an emergency cabinet meeting on Monday and the Spanish government yesterday expressed "deep concern". Petrobras, whose investment in the decade since Bolivia privatised its energy sector has helped the country quadruple its gas reserves, called the measure "unfriendly" and said it would be impossible to make new investment when companies would only be allowed to keep 18 per cent of profits.
Repsol, the most exposed of the Western oil companies, already had to slash reserves in Bolivia in January amid uncertainty about the political climate. BP has two joint ventures in Bolivia. Wendy Silcock, a spokeswoman for BP, said the company was a "very small player" in Bolivia. "It's a small piece of our business and it's too early for us to be able to comment," she said.
Bolivia's Vice-President Alvaro Garcia said nationalisation would earn an extra $320m (£175m), boosting state revenues from the sector to $780m.
More
http://news.independent.co.uk/world/americas/article361562.ece
His sudden decision to send troops to guard dozens of plants, refineries and pipelines and give foreign companies including Brazil's Petrobras, Spain's Repsol-YPF, BP and British Gas and Total of France six months to renegotiate their contracts or get out, signalled a tougher stance as he marks 100 days in office. And it underlined a growing affinity with the Venezuelan President, Hugo Chavez, who has also cracked down on foreign firms.
Though a tiny, landlocked country, Bolivia is an energy powerhouse with the second-largest gas reserves in South America behind Venezuela. Neighbouring countries rely heavily on its gas exports, and prices can now be expected to rise.
Brazil's President Luiz Inacio Lula da Silva called an emergency cabinet meeting on Monday and the Spanish government yesterday expressed "deep concern". Petrobras, whose investment in the decade since Bolivia privatised its energy sector has helped the country quadruple its gas reserves, called the measure "unfriendly" and said it would be impossible to make new investment when companies would only be allowed to keep 18 per cent of profits.
Repsol, the most exposed of the Western oil companies, already had to slash reserves in Bolivia in January amid uncertainty about the political climate. BP has two joint ventures in Bolivia. Wendy Silcock, a spokeswoman for BP, said the company was a "very small player" in Bolivia. "It's a small piece of our business and it's too early for us to be able to comment," she said.
Bolivia's Vice-President Alvaro Garcia said nationalisation would earn an extra $320m (£175m), boosting state revenues from the sector to $780m.
More
http://news.independent.co.uk/world/americas/article361562.ece
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