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Bolivia’s President Vows To Press On With Nationalization January 5, 2007

Posted by notapundit in World News.
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LA PAZ, Bolivia (AP)–President Evo Morales has vowed to continue his administration’s reversal of a decade-old privatization of key Bolivian industries in the wake of the the departure of French-owned water utility Aguas de Illimani from Bolivia.

In a ceremony at the presidential palace in La Paz, Morales officially bid farewell to the affiliate of French transnational Suez (12052.FR), which has provided water to the capital of La Paz and its poorer satellite, El Alto, since a former public utility was privatized in 1997.

“Water cannot be turned over to private business,” Morales said. “It must remain a basic service, with participation of the state so that water service can be provided almost for free.”

Aguas de Illimani’s high rates and a reluctance to expand service into the fringes of the twin cities prompted protests in El Alto in 2005 demanding the water system be returned to state control.

Then-President Carlos Mesa moved to rescind Aguas de Illimani’s contract, but negotiations continued for two years before Morales’ government and the company agreed to severance terms this week.

“We have achieved an agreeable exit, assuring that foreign businesses will not simply be expelled from Bolivia,” Morales said Thursday.

The president echoed other speakers at the ceremony in calling for other foreign companies operating in privatized sectors to be returned to state control, including La Paz power utility ElectroPaz, owned by Spanish energy company Iberdrola SA (IBE.MC), and telecommunications company Entel, a subsidiary of Telecom Italia SPA (TI).

“We have much left to do,” Morales said.

Elected a year ago as Bolivia’s first Indian president, Morales nationalized his country’s extensive natural gas reserves on May 1, assuming a greater share of their revenues and control over their Bolivian operations.

Morales has also expressed a desire to also nationalize the mining industry.

Bolivia will accept $15.1 million in debt from Aguas de Illimani, $5.5 million of which is owed to the company’s Bolivian shareholders.

The company will be replaced by a newly formed public utility that Germany, Spain and Venezuela have together donated $5.5 million to get up and running.

Bolivian Water Minister Abel Mamani, a leader of the 2005 El Alto protests, said Thursday the new company will need an investment of at least $35 million over its first five years to expand service to the parts of the La Paz-El Alto metro area most in need of water.

Under pressure from the World Bank and International Monetary Fund, former President Gonzalo Sanchez de Lozada privatized a wide swath of Bolivian industry in the mid-1990s, including the oil and gas, water, power, railroad and telecommunications sectors, as well as the national airline and pension plan. But the privatization has mixed results and failed to create new jobs as Sanchez de Lozada had hoped.

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