Iberdrola will be compensated according to a  valuation to be drawn up by an independent arbiter, Morales said, adding that the measure was aimed at enhancing rural energy services.

 

"We considered this measure necessary to ensure  equitable energy tariffs ... and to see to it that the quality of  electricity service is uniform in rural as well as urban areas," Morales said. Bolivia has nationalized oil, telecommunications, mining and electrical generation companies.

 

In June, Morales took control of global commodities  giant Glencore's tin and zinc mine in Bolivia and more nationalizations  of mining companies could be ahead in the Andean country.

 

Iberdrola, whose office in capital city La Paz was  being guarded by police on December 29, has operated in Bolivia since  the late 1990s. An Iberdrola spokesman said the company was studying the situation and declined to comment further.

 

Spain regretted Bolivia's actions, the Spanish  Ministry of Foreign Affairs said in a statement, adding the government  hoped the shareholders of the companies involved would be fairly  compensated.

 

"This decision by the Bolivian government involves  companies that carried out the public service of distributing  electricity that have never belonged to the Bolivian state," the  statement said.

 

The Iberdrola units are Electropaz, which supplies  around 470,000 customers in the cities of La Paz and El Alto; and Elfeo, which supplies over 80,000 customers in the city of Oruro.

 

The nationalization also includes two small suppliers owned by Iberdrola, which provide services to the distributors.

 

In 2006, Morales announced the takeover of petroleum companies operating in Bolivia. He later nationalized oil and gas  reserves to redistribute wealth to the landlocked country's indigenous  majority.

Iberdrola is not the first Spanish company to have its assets seized in Latin America.

 

Bolivia decided to nationalize a power transmission  unit of power grid operator Red Electrica in May, just weeks after  Argentinian President Cristina Fernandez seized YPF , the country's  biggest energy company, accusing oil major Repsol of underinvesting at  the unit.

 

The World Bank's arbitration body has agreed to begin an arbitration process on the Repsol case.
      Another report [2] from La Paz, Bolivia said:

 

In a public ceremony, Morales issued a decree  allowing the takeover of shares in Empresa de Electricidad de La Paz  (Electropaz) and Empresa de Luz y Fuerza de Oruro (Elfeo), which supply  energy in this Andean nation.

 

Soldiers guarded the installations of the electricity distribution companies, marked with signs reading: “Nationalized.”

 

In the ceremony at Bolivia’s government palace,  Morales also announced the expropriation of an investment management  company and a service provider belonging to the Spanish energy giant.

 

Morales said he had “been forced to take this step” to ensure that electric service rates remain “equitable” in the regions  of La Paz and Oruro.

 

Spain said it hoped “the process of assessing the  value of the nationalized company is done with high standards of  objectivity that would establish the just compensation to which  shareholders are entitled.”

 

Telephone calls and emails seeking comment from Iberdrola in Spain were not immediately answered.

 

The decree read by Morales calls for Iberdrola to  receive indemnification after an independent firm is hired within 180  days to determine the value of the nationalized shares.

 

In 2009 Morales transferred to state control the  country’s largest telephone operator, which had been controlled by  Italy’s ETI, and in 2010 he did the same with the four largest power  generators, which had belonged to French-owned Suez, Rurelec of Britain  and Bolivian shareholders.

 

Source:

 

[1] Reuters, “UPDATE 3-Bolivia nationalises Iberdrola electricity companies”, Dec 29, 2012,

 

[2] The Washington Post/ AP, “Bolivian president  expropriates electricity distribution subsidiaries of Spain’s  Iberdrola”, Dec 29, 2012,