Bolivia defends seizing foreign energy firms

Policemen cut the fence of a Swiss-owned factory in Vinto, Bolivia, in February 2007 after President Evo Morales nationalises the company Bolivian police try to enter a foreign-owned company which the government has nationalised

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Bolivia's government has defended its policy of nationalising companies that it says are vital to the economy.

Businesses in the energy sector have been seized by President Evo Morales's left-wing administration.

It follows a trend started by Venezuela's president Hugo Chavez, who has called on all Latin American nations to follow his lead.

Bolivia's government has said it is redistributing oil and gas wealth to the country's indigenous population.

In May 2010, four electricity firms, which between them account for more than half of Bolivia's electricity market, were expropriated.

"We're just fulfilling the promise we made when we were elected, to recover all these areas that were in the hands of the state before these privatisations", Vice President Alvaro Garcia Linera told the BBC World Service.

Armed police

Bolivia's vice president is currently visiting the UK, and is trying to persuade British companies to invest there.

But he has had to answer questions about the expropriation of these electricity firms, one of which was British.

"Foreign investment can come to different areas. All we're expecting is that they comply with the rules of the country," said Mr Linera.

Rurelec, which is based in London, owned just over half of Guaracachi, a power-generating company in Bolivia.

On 1 May 2010, Guaracachi's office was taken over by government forces and handed over to ENDE, the state power company.

Rurelec says armed officers, clad in balaclavas and armed with automatic weapons, smashed their way into their Santa Cruz office.

"Military police came in, they kicked down the doors and they took control of all of our facilities. They removed my finance director at gunpoint", said Peter Earl, Rurelec's chief executive.

Compensation
President Evo Morales addresses a crowd President Evo Morales is redistributing oil and gas wealth to the country's poor

Rurelec is seeking compensation from the Morales government, but so far nothing has been paid.

In May, the company said at least $70m (£46m) would be a "fair" figure.

This week Mr Earl told the BBC: "It depends how the Bolivians choose to play it. If they force us to go to arbitration, we will be claiming in excess of $150m."

Britain's BP and France's GDF Suez have also had assets seized in Bolivia.

The government said it was compensating fairly the former owners of businesses that have been nationalised.

Despite what has happened, firms, such as Rurelec, still seem keen to invest in Bolivia.

The Andean country is one of the poorest and least developed in Latin America, but its economy is growing fast.

It has the region's second largest reserves of natural gas, after Venezuela.

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