Identifier
Created
Classification
Origin
06LAPAZ2011
2006-07-26 13:05:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy La Paz
how-toVZCZCXYZ0003 PP RUEHWEB DE RUEHLP #2011 2071305 ZNR UUUUU ZZH P 261305Z JUL 06 FM AMEMBASSY LA PAZ TO RUEHC/SECSTATE WASHDC PRIORITY 0058 INFO RUEHAC/AMEMBASSY ASUNCION 6013 RUEHBO/AMEMBASSY BOGOTA 3331 RUEHBR/AMEMBASSY BRASILIA 7182 RUEHBU/AMEMBASSY BUENOS AIRES 4445 RUEHCV/AMEMBASSY CARACAS 1720 RUEHPE/AMEMBASSY LIMA 1735 RUEHMN/AMEMBASSY MONTEVIDEO 3935 RUEHQT/AMEMBASSY QUITO 4351 RUEHSG/AMEMBASSY SANTIAGO 8913 RHEHNSC/NSC WASHINGTON DC RHEBAAA/DEPT OF ENERGY WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS LA PAZ 002011
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW
E.O. 12958: N/A
TAGS: ECON EINV ENRG EPET BL
SUBJECT: TRANSREDES UPDATE
REF: A. LA PAZ 1842
B. LA PAZ 1936
UNCLAS LA PAZ 002011
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW
E.O. 12958: N/A
TAGS: ECON EINV ENRG EPET BL
SUBJECT: TRANSREDES UPDATE
REF: A. LA PAZ 1842
B. LA PAZ 1936
1. (SBU) Summary: Transredes' board will meet at the end of
July to discuss acquisition of the company's shares by the
GOB. According to a Transredes executive, the company could
live with GOB majority ownership, as long as the private
investors, Shell and Prisma, retained operating control. The
GOB's failure to implement transportation regulations means
that Transredes continues to operate in a legal limbo,
compounding its difficulties in securing needed financing.
Transredes is concerned about the erosion of Bolivia's weak
democratic institutions and the increasing presence of
Venezuelan energy firm, PDVSA. End summary.
Transredes to Discuss Ownership Structure
--------------
2. (SBU) Transredes executive Maria Claudia Dabdoub told
Econoff on July 24 that Transredes' board would meet during
the last week of July to discuss its ownership structure and
draft a proposal to present to the shareholders. She said
that the board would likely accept selling the 16 percent of
shares to the GOB needed for it to gain majority ownership of
the company (ref A) if Transredes' private investors, Shell
and Prisma, maintained operating control. If the GOB refused
to delegate operating control to the private investors, she
argued that Transredes would not be able to continue
operating in Bolivia, as it would not be able to guarantee
results.
Still No Transportation Regulations
--------------
3. (SBU) Dabdoub complained that the GOB had still not
promulgated transportation regulations based on the 2005
Hydrocarbons Law, which would provide Transredes with a more
certain operating environment and possibly aid the company in
unlocking credits frozen by the Inter-American Development
Bank and the Andean Development Corporation (ref B) needed to
complete several pipeline construction projects. The company
is using its cash flow to finance current operations and
would not pay out dividends in the near-term, she said.
Concerns about Venezuela and Democracy
--------------
4. (SBU) Dabdoub added that the Venezuelan energy firm,
PDVSA, had increased its presence and visibility in Santa
Cruz and begun an advertising blitz nation-wide. Press
reports on July 25 indicated that PDVSA would soon begin
hydrocarbons exploration in the northern La Paz region.
Dabdoub expressed concern about Venezuela's influence in the
country and the weakening of Bolivia's democratic
institutions, including respect for the law. A recent
example, she noted, was the GOB's attempt to avoid sharing
hydrocarbons revenue with the regions as required by law (ref
B). Instead of following the law, she complained, the GOB
offered to "dialogue" with the parties involved in any given
dispute and then did what it wanted in the end. However, in
the case of revenue sharing, she believed that the regions
would force the GOB to back down and share the wealth.
GREENLEE
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW
E.O. 12958: N/A
TAGS: ECON EINV ENRG EPET BL
SUBJECT: TRANSREDES UPDATE
REF: A. LA PAZ 1842
B. LA PAZ 1936
1. (SBU) Summary: Transredes' board will meet at the end of
July to discuss acquisition of the company's shares by the
GOB. According to a Transredes executive, the company could
live with GOB majority ownership, as long as the private
investors, Shell and Prisma, retained operating control. The
GOB's failure to implement transportation regulations means
that Transredes continues to operate in a legal limbo,
compounding its difficulties in securing needed financing.
Transredes is concerned about the erosion of Bolivia's weak
democratic institutions and the increasing presence of
Venezuelan energy firm, PDVSA. End summary.
Transredes to Discuss Ownership Structure
--------------
2. (SBU) Transredes executive Maria Claudia Dabdoub told
Econoff on July 24 that Transredes' board would meet during
the last week of July to discuss its ownership structure and
draft a proposal to present to the shareholders. She said
that the board would likely accept selling the 16 percent of
shares to the GOB needed for it to gain majority ownership of
the company (ref A) if Transredes' private investors, Shell
and Prisma, maintained operating control. If the GOB refused
to delegate operating control to the private investors, she
argued that Transredes would not be able to continue
operating in Bolivia, as it would not be able to guarantee
results.
Still No Transportation Regulations
--------------
3. (SBU) Dabdoub complained that the GOB had still not
promulgated transportation regulations based on the 2005
Hydrocarbons Law, which would provide Transredes with a more
certain operating environment and possibly aid the company in
unlocking credits frozen by the Inter-American Development
Bank and the Andean Development Corporation (ref B) needed to
complete several pipeline construction projects. The company
is using its cash flow to finance current operations and
would not pay out dividends in the near-term, she said.
Concerns about Venezuela and Democracy
--------------
4. (SBU) Dabdoub added that the Venezuelan energy firm,
PDVSA, had increased its presence and visibility in Santa
Cruz and begun an advertising blitz nation-wide. Press
reports on July 25 indicated that PDVSA would soon begin
hydrocarbons exploration in the northern La Paz region.
Dabdoub expressed concern about Venezuela's influence in the
country and the weakening of Bolivia's democratic
institutions, including respect for the law. A recent
example, she noted, was the GOB's attempt to avoid sharing
hydrocarbons revenue with the regions as required by law (ref
B). Instead of following the law, she complained, the GOB
offered to "dialogue" with the parties involved in any given
dispute and then did what it wanted in the end. However, in
the case of revenue sharing, she believed that the regions
would force the GOB to back down and share the wealth.
GREENLEE