A key feature of the decree is the equitable revenue sharing model announced by President Rodrigo Paz, where 50% of additional income from hydrocarbons sales and royalties are allocated to subnational governments and universities. Governed by Hydrocarbons Law 3058, royalties include an 11% departmental share, 1% compensatory royalties to Beni and Pando departments, 6% participation by the TGN, and a 32% Direct Hydrocarbon Tax (IDH) on production at the “boca de pozo” (wellhead). Higher fuel prices at this extraction point increase revenues across these categories, boosting budgets at the regional and municipal levels. This funding supports improvements in local infrastructure such as roads, schools, and hospitals, as well as investments in higher education.
The adjustment also targets illegal fuel trade by reducing arbitrage opportunities, particularly in diesel where reliance on imports had increased vulnerability to contraband. Following the decree, diesel demand declined by approximately 30%, indicating reduced black-market activity and better fuel availability in border regions like Pando and Potosí. The government plans to transition gasoline and diesel distribution gradually to private sector participation from 2026 onwards while maintaining YPFB’s role in wholesale blocks, ensuring supply stability.
The decree is part of a broader energy reform encompassing new laws on hydrocarbons, electricity, green energies, and lithium, aimed at fostering private and international investment. Analysts highlight the necessity of aligning domestic oil price references more closely with international benchmarks to attract these investments. Overall, Bolivia’s fuel price policy realignment strengthens fiscal sustainability and regional development while signaling a strategic shift toward market-driven energy sector management.
This article was curated and published as part of our South American energy market coverage.
