The government frames the subsidy elimination as necessary to free resources currently absorbed by artificially low fuel prices. Paz indicated the price differential between Bolivia and neighboring countries incentivizes smuggling, with state funds effectively subsidizing contraband operations. The administration argues redirecting subsidy expenditures toward hospitals, schools, roads and public sector positions in health and education represents a more efficient allocation. The International Monetary Fund’s $1.9 billion agreement, which opens access to an additional $4.5 billion from multilateral institutions, explicitly prohibits using those resources for fuel subsidies.
Santa Cruz Governor Juan Pablo Velasco separately proposed YPFB exit fuel importation and commercialization entirely, with private companies handling the full supply chain at market prices. Velasco suggested establishing diesel prices around 16.50 bolivianos per liter based on current oil barrel valuations, compared to the subsidized rate of 9.80 bolivianos. He proposed a three-month emergency direct payment for public transport users during transition, followed by a technology-based system using vehicle identification to target assistance to actual service provision rather than generalized fuel price support.
The administration on August 17 implemented a reference price of 18 bolivianos per liter for large diesel consumers exceeding 5,000 liters monthly, maintaining subsidized rates for public transport and smaller users. Multiple sectors protested the measure with road blockades demanding its reversal. Paz emphasized the current parliamentary composition holds over 87% of votes needed for constitutional modifications, positioning hydrocarbon and mining law reforms as immediate legislative priorities. The government received one entity with an import license as Federación de Cooperativas Mineras Auríferas del Norte de La Paz obtained authorization to bring in fuel supplies.
This article was curated and published as part of our South American energy market coverage.
