President orders army to occupy gas, oil facilities (Roundup)

May 1, 2006, 20:32 GMT

La Paz - Bolivian President Evo Morales Monday signed a decree to immediately nationalize the country's gas and oil industry, and ordered the military to occupy energy facilities.

Morales, 46, who was elected president in December on his pledge to nationalize the industry and make coca crops legal, made the announcement during a May 1 speech in the energy management centre of San Alberto, in the southern province of Tarija.

Wearing a hard hat typical of oil workers, Morales said international companies would be given 180 days to negotiate new contracts. Most of the country's natural gas deals were sealed in 1996, when Bolivia conceded 40 years of rights to Repsol of Spain, Petrobras of Brazil, Total of France and British Gas.

'This is a historic day, when Bolivia retakes the absolute control of our natural resources,' Morales said. 'The state is recovering the property, the possession of and the total and absolute control of these resources.'

Bolivia has the second largest deposits of natural gas in Latin America, after Venezuela. The nationalization move clashes with the secession efforts of the relatively oil-rich regions around Santa Cruz and Cochabamba, who are to vote in July on autonomy.

Morales, who pledged in December that multinationals would not be confiscated or expropriated, told the audience that the entire oil and gas production would become property of Bolivia, which will define 'the conditions, volumes and prices' for the domestic and export markets.

He said the income would solve the economic and social problems of the Andean nation, one of the poorest in South America.

The nationalization marks the third time the state took over the energy sector, starting in 1937 and again in 1969. Morales called Monday's decree the third and definitive nationalization of petroleum and gas.

The volatile energy issue brought down previous governments, including that of president Gonzalo Sanchez de Lozada, who was forced to drop participation by Chile in Bolivia's gas industry, and Carlos Mesa, who was the subject of intense protests demanding nationalization.

A forewarning of Monday's decree was given last week, when Carlos Villegas, Bolivia's planning and development minister, said in an interview in Washington that oil companies would no longer have the freedom to set prices and export volumes, Bloomberg news service reported.

The government was also to implement a law passed last year by Congress to boost taxes to 50 per cent of oil and gas output, up from 18 per cent taxes, the minister indicated.

Prices would be raised for natural gas exported by Petrobras and Repsol to Brazil and Argentina, Latin America's largest economies, Villegas said.

Shortly after his election in December, the left wing Morales declared that the government would exercise 'its right to state ownership of Bolivia's hydrocarbons' through new legislation and renegotiation of contracts with international companies. But he pledged that he would support oil companies' ownership of assets.

Morales, the first president in Bolivian history from the country's Indio ethnic majority, won Bolivia's presidential election by a wide margin. Indios make up 70 per cent of the population.

Morales, who becomes the fifth president since 2002 in Bolivia, campaigned on a left-wing platform that would also legalize coca and redistribute wealth.