In the scope of a government offensive to modernize the Bolivian economy and call for Brazilian investments in Bolivia, the latter country’s government announced four key reforms aimed at opening up the sector and invited private companies to participate in exploration and production activities.
Brazilian and Bolivian investors participated in the forum in São Paulo, where around 300 businessmen participated to discuss business opportunities.
The measures were unveiled by Bolivian President Rodrigo Paz at the forum. “We have begun a new era of openness, predictability, and pragmatism,” said Paz.
The reforms intend to make Bolivia a regional leader when it comes to competitiveness in order to attract international capital. The four reforms target Bolivia’s energy sector and lay the foundations for future private investment in mining and industry.
Paz called on Brazilian investments in Bolivia during his speech at the forum.
Four Key Reforms: Inviting the Private Sector
The reforms that form the pillars of the Bolivian government’s plan of “reactivating Bolivia” and invite the private sector participation are:
- New Hydrocarbons Law
- New Electricity Law
- Green Energy Law
- New Lithium Law
As reported by President Paz and Minister of Hydrocarbons Mauricio Medinaceli, Bolivia will overhaul its regulatory framework in the energy sector through these reforms.
Hydrocarbons Law
- New contract scheme for hydrocarbons exploration and production.
- New forms of association between private companies and YPFB.
Electricity Law
- Align regulation in electricity generation, transmission, and distribution.
- Integration with regional grids.
Green Energy Law
- Development of green energy sources, including biofuel.
- Bioethanol specifically calls on Brazilian know-how in ethanol production.
- Hydrogen development and incentives.
- Electric mobility.
Lithium Law
- Opening of Bolivia’s lithium reserves for private companies.
- Allocation of areas for exploration and production under new contracts.
- Fast-track industrialization of the lithium value chain, including battery production.
Medinaceli commented on the reforms, saying that Bolivia is “changing the rules of the game by incorporating flexibility, efficiency, and incentives.”
Call Brazilian Investments in Bolivia
“Our country is open to anything that contributes to building a strong nation that produces and develops,” Paz said during the business forum while discussing Brazilian investments in Bolivia.
Brazilian companies could take advantage of Bolivia’s agribusiness potential by exporting Brazilian expertise in biofuel production.
Furthermore, the president reassured businessmen that Bolivia is “developing predictability and legal certainty” by providing incentives for production and clear rules that would allow fast-track authorization of projects and industries.
“We want Bolivia to be predictable for those who invest here,” said Paz.
Flexibility & Predictability
“Our foreign policy has no rigidity. We have met with President Trump as well as President Maduro,” Paz said while describing Bolivia’s foreign policy towards nations of different political ideologies.
“We are interested in what is convenient for Bolivia and what works. We are not interested in ideologies of the right or left,” he added.
Paz reiterated the government’s commitment to pragmatism and said that it will continue to pursue economic policies that deliver results while seeking out international capital.
“We want to continue improving the quality of life of our people,” Paz said.
Paz also reassured businessmen that regulatory changes would not be reversed by future administrations. Medinaceli also commented that Bolivia is aligning legislation with countries such as Canada and Australia in order to compete for capital in what he describes as a “competitive world cup.”
Brazil Cheers Bolivia’s Announcement
Brazilian authorities cheered Bolivia’s announcement and call for Brazilian investments in Bolivia.
“In agriculture, Brazil already has extensive experience that can help Bolivia expand production and also produce more for exports,” said Brazil’s Minister of Agriculture.
Jorge Viana, president of Brazil’s trade promotion agency, promoted ties between Santa Cruz and other states in Brazil, as Santa Cruz de la Sierra is Bolivia’s economic hub.
The main Brazilian companies showed interest in investing in Bolivia and expanding current operations. “Bolivia and Brazil can cooperate not just in energy but also in areas such as defense, agribusiness, and commercial aviation,” said an executive of a major Brazilian defense firm.
Brazilian oil company Petrobras will meet with Bolivian officials to “relaunch” the relationship between the two state-owned energy giants as Bolivia reforms its hydrocarbons sector.
“Brazil will contribute its vast experience in renewable energies,” Brazilian Vice President Hamilton Mourao said on Tuesday.
“We want to relaunch our relationship with an important firm, such as Petrobras, with clear rules of engagement,” Paz said.
Industry insiders have already responded well to Bolivia’s proposed hydrocarbons law, stating that the law will “level the playing field” and open up opportunities for investors interested in Bolivia’s vast hydrocarbon reserves.
Areas of cooperation between the two countries include greater energy integration, with Bolivia providing natural gas to power generation in Brazil, and modernizing its energy legal framework to allow Brazilian companies to participate in Bolivia’s promising energy sector.
“The new Hydrocarbons Law will certainly bring more predictability for private companies looking to develop Bolivia’s gas resources,” said Jorge Quiroga, former Bolivian president.
Brazilian investments in Bolivia could help exploit Bolivia’s natural gas potential. Brazil will continue to sell Bolivia’s natural gas as Bolivia invests in processing and petrochemical industries.
Quiroga also highlighted Bolivia’s complementary agricultural sectors; sharing Brazil’s experience in meat production could allow Bolivia to increase cattle stocks and boost exports.
The two nations also intend to boost supply chains in critical minerals, with Bolivia providing raw materials and Brazil providing refined products.
The current push for Brazilian investments in Bolivia highlights Bolivia’s push to diversify away from being China’s neighbor to South America’s neighbor.