The results of the so-called «nationalization» of hydrocarbons in Bolivia with official data

The results of the so-called «nationalization» of hydrocarbons in Bolivia with official data

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Today, I feel happy. I imagine that this is the kind of happiness of the detective who solves a case, of the student who receives a good grade, of the theoretician who proves a theory. Today I’m happy because YPFB (oil state company) finally published information that I’ve been looking for a long time… since 2007. This information refers to the fiscal results of the so-called «nationalization» of hydrocarbons in Bolivia.

In many times that I tried to approximate this number collecting information from many different sources. I tried to give consistency to the data, crossing fingers to minimize the error. Some examples you will find in the following links: link01link02link03link04 and link05.

The issue is that YPFB published, officially, the data in question and now with complete security I can confirm my suspicions of past years. The so-called «nationalization» of hydrocarbons increased the government take (over wellhead revenues) from 50% (already existing with the Hydrocarbons Law 3058) to 64%. For my friends from other countries, let me explain you that in Bolivian the Government Take is measured on the gross revenues at wellhead, “we don’t like” the right and common approach of GT measured over the net benefit of the operation.

As you can see in the following table, the so-called «nationalization» process ranged from 11% (excluding 2007) to 17%; on average (the last column in gray) was 14%. If you add this number to the royalties and the current production tax (IDH) the total GT is 66% (don’t forget the measure is over gross revenues at wellhead) leaving 34% as gross retribution for the operator (that includes recoverable costs), see the following figure. Now, I hope, the reason of my happiness is more clear, my previous suspicions were not far from the reality, see link01link02link03link04 and link05.

However, the information provided by YPFB doesn’t end here, according to YPFB, from the green part (in the «cake» I present) it’s necessary to deduct the patents and upstream taxes, that’s why I used the words «gross retribution». The payment of patents is minor, so we can put it aside. What strikes me are the amounts paid by «Upstream Taxes», in many cases are greater than the resources obtained from the so-called «nationalization» process. I have my doubts about the items considered here. Do they include taxes paid by YPFB? Do they include taxes paid by service companies? Do they include taxes paid by companies that only carried out exploratory work? Therefore, and until the National Tax Service don’t officially publish this information the doubt will still be around my head.

Now, as my mother would say, «nobility obliges», I must congratulate the technical people of YPFB for the publication. If you allow me a couple of suggestions for the future: 1) publish this information by field and; 2) perform this exercise, at least, on annual basis. On the other hand, it’s the turn of the National Tax Service, it’s in their hands to publish the taxes not only paid by the upstream, but also, by the other segments of the chain, thus, on solid bases we can talk about the future of the sector.

As you maybe already know, I opened my channel in Youtube channel, so I invite you to take a tour and watch video1video2 and video3. In these videos I discuss the recent increase in the natural gas prices applied to the industrial sector in Bolivia.

A pleasure to have shared with you these data and ideas, there are only 17 days remaining to go back to my beloved country. I finished this contract and now I’ll try to look for opportunities at home next to my family and especially my dear Santi, who doesn’t stop to amaze me with this types of conversations:

After leave some food  on the street for some street dogs, Santi told me: «Dad, it’s also time for us to think about people.»

A hug my dear friends

Mauricio Medinaceli Monrroy

Kabul, September 7th  2017

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