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    New rules for natural gas in industry

    September 30, 2022 - CE Noticias Financieras


      The national government has surprised the country with a new policy regarding the use of natural gas that seems to go against its own nationalizing discourse and to promote the country's productive activity.

      Through Supreme Decree 4749, it decided that within one year Bolivian industries will have to stop using natural gas for electricity generation and that these volumes will be exported, in order to improve the State's income.

      The first reaction of the industrialists was of concern, because they understand that such a measure will be an attack against national production and the pocket of the population, which will suffer the transfer of the increase in production costs.

      Currently, domestic industries receive gas at subsidized prices ranging from US$ 1.86 to US$ 2.51 per thousand cubic feet. Prices for the same unit of volume for export fluctuate between US$ 4.95 and US$ 10.5.

      The change was approved, according to the decree, within the framework of the principle of efficiency and with the purpose of guaranteeing energy security in the short, medium and long term, adequately satisfying the national demand for hydrocarbons.

      A detail of precision that is necessary to point out in the decree is that although it recognizes the use of natural gas as fuel in industrial establishments whose purpose is the transformation of raw materials into processed products, what will no longer be allowed is that this energy is used in a complementary manner in the generation of electricity for industrial consumption.

      The Chamber of Industry, Commerce, Services and Tourism of Santa Cruz questioned the contradiction incurred by the national government, which in 2014 - with another president but with the same party in power - asked the private sector to invest in the installation of its own electricity generators that run on gas. And now what it would be provoking with the decree is that they close those plants, in which the private company invested good amounts of economic resources.

      The decree establishes a maximum period of one year for the companies to adapt to the new regulations.

      As an exceptional detail, it is contemplated that gas-fired electric power generation equipment may be used as backup only in the event of failures in the national interconnected electric power system and only for the duration of the accidental event.

      The change in the policy on the use of natural gas in the internal consumption of the industry to generate electricity is controversial to say the least. It calls into question the Bolivian objective, like that of any other country, to generate conditions for the private sector to produce and thus generate employment, surpluses, exports, foreign currency income and to give movement to the economy.

      The measure also shows, once again, that gas is running out in the country and that at this point it is not even enough to meet international sales commitments to Argentina and Brazil.

      The Government could have removed the gas subsidy to the industrial sector and charged, if necessary, the same prices at which the energy is sold to neighboring countries. What is clear is that when companies begin to stop using gas for electricity generation, the prices of their products will go up, and those who will suffer this effect immediately will be the consumers.


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