Bolivia Raises Fuel Prices to Protect Economy and Stop Subsidizing Smugglers


The Bolivian government approved on Sunday a decree to bring fuel prices in line with regional prices, “to protect the economy and stop subsidizing smugglers,” which adjusts gasoline and diesel prices while keeping frozen the prices of liquefied petroleum gas and vehicular natural gas.

At a press conference, Vice President Álvaro García Linera, temporarily assuming presidential duties due to Evo Morales’s trip to Venezuela, announced Supreme Decree 748, approved by the cabinet of ministers at a meeting held in the Palacio Quemado, the seat of the executive branch.

“We can no longer subsidize either smugglers or the powerful who have five or six cars.  What we want to do is to use the money for fuel subsidy for the benefit of the Bolivians, for the neediest,” he argued.

The Bolivian vice president said that the decision was taken by the cabinet after a long debate, to “protect the Bolivian economy.”

“And, last but not least, we are also subsidizing smugglers who take our gasoline and diesel in hidden double tanks and jerry cans, on foot and by bicycle, on donkeys and llamas, to other countries like Peru, Chile, Argentina, and Brazil,” he said, revealing that a liter of gasoline costs 9.36 bolivianos in Chile, 10.5 bolivianos in Brazil, and 7.28 bolivianos in Peru.  A liter of diesel costs 8 bolivianos in Brazil and 7 bolivianos in Chile.

The vice president explained that the decree raises the prices of “liquid fuels,” including diesel, gasoline, special gasoline, and aviation fuel, and that it doesn’t affect the LP gas and vehicular natural gas prices.

“We are adjusting the gasoline and diesel prices fundamentally,” he said, announcing that the gasoline price will rise from 3.74 bolivianos to 6.47 bolivianos.  Special gasoline will rise from 4.79 to 7.51 bolivianos, a 57% increase, and diesel from 3.72 to 6.80 bolivianos, “an increase of 82%.”

“We are bringing our prices in line with regional ones.  We cannot have low prices here in Bolivia and high prices outside the country, because then all our gasoline and diesel flow out like rivers.  We have tried to protect ourselves from smuggling, we have mobilized the Armed Forces, we have done everything, but it’s impossible,” the vice president contended.

In his estimation, a smuggler can sell 10 liters of gasoline in Brazil or Peru and get enough profit to live for a couple of weeks.  “That just won’t do,” he emphasized.

The government justified the decision by explaining that the fuel subsidy has risen from $80 million in 2005 to $380 million and that the rising trend is unstoppable if no measures to protect the economy are taken.

“We don’t want that trend to continue.  Our model of development needs to be protected.  We will continue to grow and invest, but we cannot continue to bleed,” García Linera said, announcing complementary measures to prevent negative impacts on the population.

He announced that an aggressive policy to incentivize oil production will be implemented, which will also increase liquid fuel production; that the prices of basic services, such as electricity, water, and telephone, will be frozen; and that direct and immediate purchases of natural gas conversion kits for vehicles that run on gasoline, as well as duty-free import of spare parts for public transport, among other measures will be authorized.

The original article “Gobierno nivela combustibles para proteger economía y no subvencionar a contrabandistas” was first published by ABI on 26 December 2010.  Translation by Yoshie Furuhashi (@yoshiefuruhashi | yoshie.furuhashi [at]  Cf. “Choferes declaran paro general indefinido contra el gasolinazo de Navidad” (Bolpress, 27 December 2010).

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