Mauricio Medinaceli Monrroy
Private Consultant
Oil - Natural Gas - Energy

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Diesel imports in Bolivia: When is more important to change clockwise

Whether clockwise you turn right or left, time passes and imports of diesel oil in my country grow every day. The gentle reader will wonder why I start with such a strange phrase... it turns out that in Bolivia (my country) a few days ago, as a Government initiative, the main clock of Congress (now called Assembly) is backwards... see attached photo. The Bolivian government explained the reasons that led to such a decision time and, as you may anticipate, the controversy became dormant. In fact, it was not necessary to verify Einstein's theory to make a clock in Bolivia go in the opposite direction, only a political decision was necessary.

Unfortunately the important decisions in my country... are far from simple solutions like reversing the direction of the main clock. The important decisions are generally medium to long term and therefore with a little political gain. One of this decisions is relates to the auto sufficiency of liquid fuels in the country, in particular diesel oil. Therefore, I invite you to review some statistics.

According to the figure below, in 1999 the Bolivian hydrocarbons imports wrew little less than US$ 60 million per year, but in 2013 such imports reached the creepy figure of U.S. $ 1.237 billion, equivalent to 4.1% of GDP. Note that for the year GDP growth was 6.8%, therefore, the amount of imported fuel is not a minor issue.

blog.14.06.25 01.en

What factors led to this situation? Several ones, bit here I'll pointed out a few: 1) in year 2005, when we explained to the Congress that applying a 50% royalty over the total hydrocarbons production will increase diesel oil imports, the Congress considered that was a minor issue, therefore, adopted (between songs) a hydrocarbons law that taxes the oil and gas production with 50% over the productions... yes, 50% of the gross value of production; 2) the subsidized price of gasoline and diesel oil makes the demand for both products greater than the "real" demand, so as "usual", subsidies prices increase demand and decrease production, generating "an snowball "; 3) the government of President Morales made ​​his best efforts (curiously very liberal or neo liberal) to reverse this process, in 2010 enacted a "gasolinazo" (increased prices of gasoline and diesel oil) that lasted a few days, signed contracts (under the process called Nationalization) very advantageous for oil exploitation fields, offered "tax holiday" to new investment, awarded incentives to produce oil ... ie, he used many instruments to support private investment that did not work because the solution from my point of view, is not from a by presidential supreme decree or decision, and; 4) several factors that play into the informal and illegal sectors that, if I'm not afraid to comment, will be part of another blog.

I genuinely believe that the central goal of any public policy in the energy sector is the domestics market self-sufficiency in simple words, don't import energy. Last day I talked with a good friend, it is a Pyrrhic victory "having recovered hydrocarbons in Bolivia" when our status as net exporters of energy is in danger. If things continue as usual, the poor Bolivian president in 2022 will be in tremendous trouble, and unfortunately, few people will associate the dismal economic performance of the time with faults that are made now.

While neighbors countries do their best for the self energy sufficiency for his inhabitants and adventurous tourists don't need visa to some places, in my country we change the direction of clockwise. I wanted to end this presentation with a statement like "only time will give us the answer" looking the Bolivian congress clock that phrase seems to me to a bad joke. So I'll end by mentioning that in future years, if oil imports (or derivatives) exceed natural gas exports, we will have effectively destroyed the work of thousands of people who bet on a better future. "Diablos" I feel bad!

Mauricio Medinaceli Monrroy

Santa Cruz de la Sierra, June 2014

 

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In the Blog section I invite you to read: "The future of Bolivian natural gas exports to Brazil"

 

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