Monday, May 08, 2006

Nationalization Hangover (Update 1)

Now that the nationalization has ended among feasts and celebrations, it's time to go back to the real world. El Deber reports that an Indian enterprise (Jindal Steel and Power) interested in obtaining a license to exploit the Mutun may not go further. Its representative in Bolivia said that the conditions imposed by the government are to harsh and do not really justify the investment: 50% of the steel earnings and 70% of iron. Under these circumstances, the estimated investment of $3000 million will not be viable, they said, although they have sent a reply to the government and are still waiting for an answer.

Also, the president of the Engineer's Society of Bolivia said that Bolivia should accept that the enterprise to work in El Mutun will be foreign, as there are no Bolivian enterprises with the capacity of investment needed ($1000 million minimum). This only confirms what I said in a previous post. The great loser of this nationalization is Bolivia.

Update 1: It's official: Jindal Steel & Power has left the race for the Mutun. This means that from 5 companies interested in gaining rights to exploit the Mutun only 2 are left -Siderar from Argentina and Mittal Steel from the UK. The vicepresident of the Santa Cruz Civic Committee pointed that the process is generating too many doubts -geez, I wonder why. He also said that the government does not want any company gaining these exploitation rights so that they can be given to Venezuela. "We have information of a Venezuelan delegation auditing the Mutun, and our lack of confidence comes from Executive trampling over the studies made by the previous two presidents with much harsher conditions, so that no enterprise will be interested in exploiting these resources", he added. Read it here.

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