Bolivia spends $2 billion on fuel subsidies, but loses $600 million in smuggling

Machine translation was used to publish the following Ministry of Hydrocarbons and Energy release

The national government spends $2 billion to subsidize gasoline and diesel. Of this amount, the State loses approximately $600 million due to fuel smuggling across borders.

This statement was made by the Minister of Hydrocarbons and Energy, Franklin Molina, at a press conference, where he recalled that, in previous administrations, no investments were made in the exploration and production of hydrocarbons, which has negatively affected the production of liquids.

According to the Minister, the country has been facing problems with subsidies for more than two decades. Fifteen years ago, the subsidy was $200 million, but by 2023 it had risen to around $2 billion, and a similar amount is expected for this year.

To address these challenges, the Government has implemented several measures, including lowering fuel import costs and developing an exploration plan with a focus on controlling smuggling through decrees 4910 and 4911.

Despite these actions, fuel prices in Bolivia remain the lowest in the region, which has led to almost 30% of fuel (equivalent to around US$600 million) being diverted to neighboring countries such as Chile, Peru, Paraguay and Brazil, he added.

Molina stressed the urgent need to reform policies related to subsidies, which have become unsustainable for both the State and consumers. In response to this situation, President Luis Arce has proposed submitting the issue of subsidies to a public consultation to assess the will of the Bolivian people regarding possible changes.

In addition, new products have been launched on the market, such as Ultra Premium 100 gasoline, which will be available in the coming weeks. With an octane rating close to 100, it becomes a more advanced option and suitable for high-performance vehicles. He also referred to Premium Plus gasoline, which has an octane rating of 95, compared to the current special gasoline, which has 85 octane.