Nationalisation risk rears its head in South America

Companies in the oil, mining and forestry sectors in Bolivia face an uncertain future after the country’s president signalled his intention to bring these areas under government control. The action also raised fears that other South American countries may follow suit in the longer term.

Bolivia 's President Evo Morales announced the decision in a May Day speech and gave foreign companies six months to comply with the directive, which, while stopping short of outright nationalisation of assets, would impose new and much stricter operating terms and conditions.

However EuroNews and other sources report that the Bolivian military has already begun to take control of natural gas and oil fields.

The main oil operators in Bolivia include Petrobas, Repsol, British Gas and BP.

In his speech President Morales indicated that the actions concerning energy resources were just the start and that state control would also be extended to the mining and forestry sectors and eventually all the country’s natural resources.

The situation in Bolivia highlights a political risk which needs to be considered by business continuity managers when operating in non-Western countries and when considering whether the threats engendered by entering certain markets outweigh the benefits. In turn this shows how the consideration of business continuity risks is an important aspect of holistic business development.

•Date: 3rd May 2006• Region: S.America • Type: Article •Topic: Operational risk
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