LA PAZ Bolivian President Evo Morales, who has tightened state control over the nation's small economy since taking office in 2006, on Monday nationalized an airports operator owned by Spanish infrastructure company Abertis.
In the latest in a series of state takeovers affecting Spanish-owned companies, the leftist president said Abertis's (ABE.MC) Sabsa unit had failed to fulfill investment commitments made almost two decades ago.
"I want to let the people of Bolivia know about the nationalization of Sabsa," Morales said in a televised speech in the central city of Cochabamba, adding that the company had made "an exorbitant profit with a derisory capital input."
"For this and other reasons, we were obliged to make this decision. We were ready to do this years ago, but we waited because of our diplomatic relations with certain countries," he said.
Bolivia has taken control of several power transmission and distribution companies in the last year, affecting Spain's Red Electrica (REE.MC) and Spanish utility Iberdrola (IBE.MC).
Spanish Prime Minister Mariano Rajoy has urged Latin American governments to respect Spain's investments in the region, and his foreign minister warned on Monday that state takeovers could hurt diplomatic ties.
"It's obvious that this kind of move, an expropriation that bypasses usual procedures and doesn't respect the principle of compensation ... will have consequences for bilateral relations," Foreign Minister Jose Manuel Garcia-Margallo told reporters in Madrid.
Abertis said its earnings would see zero impact from the takeover, which affects operations at Bolivia's three international airports in Cochabamba, the administrative capital of La Paz and the eastern economic hub of Santa Cruz.
"The company respects the government's decision as long as the process is conducted in accordance with international law (and) is confident of reaching an agreement to achieve adequate compensation," it said in a statement.
Morales said an independent audit would be carried out to decide how much Abertis would be paid for Sabsa, which stands for Bolivian Airport Services SA. Any outstanding debts would be deducted.
He said the government had negotiated for several months with the company over a nine-year investment plan that envisioned spending of about $56 million, but that "these efforts unfortunately have been in vain."
Abertis said it "denies accusations about inadequate investment in Bolivia, where more than $12 million has been invested in the last few years."
Morales, a close ally of Venezuelan President Hugo Chavez who shares his penchant for fiery leftist rhetoric, was elected on pledges to redistribute wealth in South America's poorest country and is highly critical of the privatizations of the free-market 1990s.
One of his first measures was to seize control of the energy industry, Bolivia's biggest foreign currency earner, and he has also nationalized a telecommunications company, several mines and a large tin smelter.
Many of those businesses, including Sabsa, were put into private hands in the 1990s. Other Spanish companies in Bolivia include bank BBVA (BBVA.MC).
Abertis shares in Madrid fell 1.4 percent to 12.70 euros per share following Morales's announcement.