Cheap fuel

Head of Economic Affairs at CAINCO

Bolivia moves more than 20 million tons of cargo per year. 90% of this is moved by road and therefore depends, if not entirely, on diesel as an energy source. According to official data, last year 2,384 million liters (MM L/year) of diesel were sold on the domestic market. In the same period, the production of this hydrocarbon was 343 MM L. The difference had to be imported and cost the taxpayer approximately $us 1,809 million.
While foreign trade cargo movement, which moves about 12 million tons per year, depends on diesel, domestic trade is no less important, although it is likely that it also depends on other energy sources such as gasoline and CNG. According to official data for 2023, 2,328 MM L. of gasoline was sold that year while its production was 1,020 MM L. In this case, the import cost approximately $us1,233 million.
The country imports just over two thirds of the diesel it consumes and just over half of the gasoline it consumes. These imports are paid for under conventional mechanisms at international prices. This means that, considering average data from last year, the country paid just over $3.3 billion. The figure is not insignificant and requires financing year after year, in US dollars. At the end of the day, the planning of the movement of cargo, final products and inputs; and of people, depends on this being the case.
But that is not all. Since 2004, public policy has decided to set a maximum price for a barrel of oil at $27.11. Likewise, the different margins of the hydrocarbon chain have remained unchanged. Since then, the sale price of diesel on the domestic market is Bs 3.72 and that of regular gasoline is 3.74, a price paid by both the righteous and the sinners.
The difference between the international price of a liter of gasoline and diesel ($US 0.89 per liter of diesel and $US 0.94 per liter of gasoline with average data for 2023) paid to the international supplier and the sale price to the domestic market is assumed by the State through Yacimientos Petrolíferos Fiscales Bolivianos (YPFB). The subsidy on diesel and gasoline cost the country $US 2.2 billion last year. This implies a heavy burden for the Administration that explains a significant part of the imbalance in the fiscal figures.
Just as with a family, any excess spending must be financed. How have the authorities financed this imbalance in recent years? By resorting to external debt, loans from the Monetary Authority and financing from Institutional Investors, including the Public Fund Manager. In other words, resources from retirement contributions. The accumulation of debt in each of these items has different, non-trivial repercussions on the economy.
For some time now, the planning of shipments and receipts of cargo, production inputs and finished goods has not been regular. There are increasingly more queues of trucks that have been stranded for days waiting to be supplied with diesel. Two or three ships with diesel are waiting to dock and a magic number of tanker trucks stranded at the border… And then? … The way things are going, there is no definitive solution in sight.
Meanwhile, the responses have been inventory adjustments, budget adjustments and, as some surveys indicate, adjustments in the expectations of families who are facing more challenges every day despite having cheap fuel.