UK company Rurelec is mounting a £46m compensation case after its stake in Bolivian power company Empresa Electrica Guaracachi was seized and nationalised by President Evo Morales.
Rurelec’s stake was held by its subsidiary Guaracachi America Inc. The nationalisation was part of a May Day supreme decree issued by president Morales which brought four of the country’s privatised electricity companies into state ownership. GAI will now be owned by state power company ENDE.
The decree states that ENDE must pay ‘fair value’ for GAI’s shares and Rurelec puts this figure at no less than $70m ($46m).
Rurelec’s investments in Bolivia are fully protected by an investment treaty between Bolivia and the UK which came into force in 1990. This treaty protects all British companies and guarantees payment of market value in the event of compulsory state nationalisation of their investments in Bolivia.
London-headquartered Rurelec is believed to be the third largest British investor in Bolivia after BP and BG. Since President Morales came into office in 2006, Rurelec has invested more than $110m in new power capacity in Bolivia, totalling 185 MW in five separate projects involving 11 new turbines or gas engines.
One of the other companies nationalised was Corani, which is half owned by a subsidiary of France’s GDF Suez. The two others were local firms.