Saturday, September 14, 2013

Bolivia: La Paz Developing Bad Reputation for Nationalizing Foreign Assets Without Compensation

According to EFE, President Evo Morales said Friday (September 13) that Spain’s Abertis Infraestructuras SA and Aena would not be compensated for the nationalization of their Sabsa unit, which had managed the Andean nation’s three largest airports.

At the same time, Morales said talks aimed at compensating Spanish utility giant Iberdrola for the expropriation of four of its Bolivian subsidiaries in December 2012 should be “accelerated.”

Regarding Abertis, “there’s nothing to negotiate...there’s nothing to discuss, they should be paying us instead,” Morales emphasized during the inauguration of new passenger boarding bridges at the Jorge Wilstermann Airport in the central city of Cochabamba.

The Bolivian government expropriated Servicios de Aeropuertos Bolivianos SA, or Sabsa, on February 18, accusing the company of not investing sufficient funds in improvements for the three airports.

COMMENT: A 25-year-concession to operate Bolivia’s three main airports – serving La Paz, Cochabamba and Santa Cruz – was awarded to Sabsa in 1997.

Sabsa has changed hands twice since then, passing in 1999 from US-based Airport Group International to Britain’s TBI, which five years later sold the firm to two Spanish concerns: state-owned aviation administrator AENA and infrastructure giant Abertis.
As in other nationalization cases, Bolivia has said in the past that it would appoint an independent auditor to determine appropriate compensation for Abertis and Aena, but has rarely delivered on its promises.

A day after the nationalization, Abertis said it would seek $90 million (nearly 70 million euros) in compensation from Bolivia for the unit.

Morales said Friday the Iberdrola units were nationalized for “social reasons” but added that talks to compensate the Spanish utility should be accelerated.

As I have often said in the past, listen carefully to what governments actually DO, rather than what they SAY.

To date, Bolivia has not performed well in terms of fairness with foreign companies. This should be a warning to all.