Ramiro Cavero and José Gabriel Espinoza, economic advisors for Alianza Libre and the PDC, respectively, agreed that natural gas will remain a short-term priority, though they stressed that Bolivia’s energy future must be directed toward renewables and lithium. Could this be a task for the new government?
ISSUE 147 | 2025
ENERGÍABolivia
Bolivia’s energy sector is experiencing one of the most complex crises in its recent history. Without energy, there is no economy and today, without energy, there is no life. In Bolivia, 80% of energy consumption depends directly on hydrocarbons: diesel, natural gas, and gasoline. In contrast, electricity accounts for barely 11%. But the issue is not only about energy it’s also a fiscal problem: over the past two decades, more than one-third of the country’s revenues have come from hydrocarbon exploitation, with regions such as Tarija showing even greater dependence.
This observation comes from Raúl Velásquez, energy researcher at Fundación Jubileo, as a prelude to a dialogue with Cavero and Espinoza during a discussion organized by ENERGÍABolivia, held just days before the presidential runoff election.
Velásquez highlighted that liquid hydrocarbon production has dropped by 62% over the past decade, forcing the country to import increasing volumes of gasoline and diesel, putting further pressure on international reserves. Today, 90% of diesel and 60% of gasoline consumed in Bolivia are imported, and the State subsidizes between 70% and 75% of their real cost.
“On top of this,” he added, “natural gas production has fallen by 54%, drastically reducing exports, royalties, and the Direct Hydrocarbon Tax (IDH). The situation is critical: Bolivia could start importing LPG by 2026 and natural gas by 2028, at prices up to ten times higher than current ones.”
He noted that after two decades of state-driven and rentier energy policies, where 92% of hydrocarbon revenue remains in State hands and only 8% goes to the private sector, the country now faces the challenge of redefining its energy model.
“We must once again recover our potential and our standing as a hydrocarbon producer,” Velásquez emphasized—echoing a call increasingly shared across various sectors. Before giving the floor to the political representatives, he warned that the challenge is enormous:
“Without investment, exploration, or incentives, the country risks shifting from being an energy exporter to a net importer.”
STATE OR GOVERNMENT POLICIES?
In response to the first question posed by ENERGÍABolivia whether they would pursue a State policy or a government policy to address the economic crisis resulting from the hydrocarbon collapse and to prevent a potential humanitarian crisis in the country Ramiro Cavero stated that they would work on both, seeking immediate and long-term solutions for the sector.
“Government policies are short-term, but we will also work on long-term State policies,” he said, explaining that in the face of the economic crisis caused by the hydrocarbon collapse, their proposal is clear: to combine emergency measures typical of a government policy with a structural long-term strategy, that is, a genuine State policy.
“In the short term, the number one priority will be to guarantee the supply of fuels,” Cavero affirmed, warning that the country is in a critical situation, at risk of running out of gasoline and diesel in the coming weeks. To address this, he said, the new administration must implement immediate measures to restore supply across the national territory without the need for prior national consensus.
However, he added, the structural step will be the approval of a new Hydrocarbons Law, a process that, according to his plan, should be completed before the end of the year, seeking a broad political and social consensus. He emphasized that this new law will rest on three pillars:
1. A regionally competitive tax regime,
2. Full transparency in cost management, and
3. A flexible fiscal structure that adjusts to fluctuations in international crude prices.
“If prices rise, the State should capture part of the surplus; but if they fall, companies must be assured that they can maintain profitability,” he explained. He also proposed eliminating the recoverable cost regime, which he described as a source of discretion and administrative burden for both the State and private companies.
The ultimate goal, he said, is to attract foreign investment under clear and stable rules, creating the conditions to reactivate exploration and production of gas and oil.
“We are certain that Bolivia still has gas and oil reserves; what’s missing is investment and we must secure that investment now, even if the results take five to seven years,” he asserted.
As a complementary measure, Cavero proposed improving the prices received by producers for liquids and gas, to promote the development of marginal fields and, as much as possible, avoid future imports of natural gas.
In his view, this combination of urgent and structural measures seeks to reverse the energy crisis and lay the foundations for a State policy that restores Bolivia’s productive capacity and energy sovereignty.
THE YOUTH
It is noted that between 1940 and 1960, several major power plants were built in Cochabamba and La Paz. However, population growth and the increasing electricity demand from households, mines, and industries required a larger energy supply met only partially by thermal plants, powered by oil extracted by YPFB.
Likewise, the aim at that time was to build hydroelectric plants by harnessing the abundant water resources of the Cordillera Real, but such projects required investments beyond the reach of the private sector, which was primarily focused on self-consumption.
“WITHOUT LEGAL CERTAINTY, THERE WILL BE NO INVESTMENT TO RESTORE SUSTAINABILITY TO THE ENERGY SECTOR”
For Gabriel Espinoza, the urgency is undeniable: the country must immediately address the shortage of liquid fuels and lay the groundwork for a profound restructuring of the energy system.
“In the very short term, it’s clear that the lack of fuel must be resolved,” he stated, emphasizing that the priority is to establish a new import logistics chain in coordination with international suppliers and neighboring countries, ensuring greater transparency throughout the process.
The economist also underlined the need to reorganize domestic price structures, as the absence of adequate incentives has discouraged national hydrocarbon production.
“The first thing we must do is realign the internal price distribution to accompany production incentives. This will allow us to gain time and stabilize the situation before approving a new Hydrocarbons Law,” he explained.
However, Espinoza warned that fiscal incentives alone will not be enough to attract new investment.
“It’s absolutely clear that without legal certainty, no type of investment will come no matter how many tax benefits are offered to the sector,” he said, stressing the importance of reforming both the Hydrocarbons Law and the Investment Law to provide strong guarantees for private capital.
“Bolivia’s path forward is clear: to build a competitive, flexible, and secure framework that attracts investment, ensures supply, and restores sustainability to the national energy system,” he concluded.
GAS OR LITHIUM?
When asked whether natural gas should remain the core of Bolivia’s energy agenda or whether the country should pivot toward renewables and lithium as strategic alternatives, both Ramiro Cavero and Gabriel Espinoza agreed that natural gas must remain a key element in the short term, while Bolivia moves decisively toward a renewable-based energy transition.
Cavero argued that gas will remain fundamental for the next five to seven years, prioritizing its use for exports to Brazil, domestic consumption, and vehicular gas. At the same time, he proposed attracting investments in solar, wind, and hydroelectric energy to reduce dependence on gas for electricity generation. He emphasized the need to update the Energy Law, guarantee legal security, and establish a clear electricity pricing framework to build investor confidence. His vision aims for a gradual migration toward a sustainable electric matrix, with gas primarily reserved for export.
Espinoza, meanwhile, stated that gas should be revalued as a strategic export resource, reducing its domestic use while maximizing its economic potential. He also highlighted the urgency of accelerating the adoption of renewables, particularly solar and hydro, through public-private partnerships and sustainable financing models. Additionally, he noted that this transition must be accompanied by a national dialogue on lithium, especially with producing regions, to redesign the current failing strategy and turn lithium into a true pillar of sustainable development.
In summary, both agreed that gas will remain a short-term priority, but Bolivia’s energy future must be directed toward renewables and lithium, supported by a stable legal framework, legal certainty, and private investment incentives.
THE RECURRING ISSUE: SUBSIDIES
Both Cavero and Espinoza concurred that Bolivia’s current fuel subsidy policy must be replaced by a targeted and transparent system prioritizing vulnerable sectors, particularly public transport, while eliminating generalized subsidies.
Cavero proposed that subsidy removal should only occur once national fuel supply is guaranteed, and after implementing a digital registry of public transport operators, who would be the sole beneficiaries of the subsidy to avoid fare increases. He suggested using control chips to monitor vehicle consumption and routes, ensuring that benefits reach only those in need. According to him, eliminating the generalized diesel subsidy would ease pressure on producers and transporters, reducing fuel lines, shortages, and uncertainty.
Espinoza, on the other hand, described the current “blind subsidy” as one of the worst economic policies of recent decades, proposing to replace it with a targeted and socially compensated subsidy. His plan envisions segmenting fuel sales points and allocating part of the fiscal savings equivalent to 4% of GDP to a demand-side subsidy for vulnerable families, identified through poverty levels, electricity consumption, or mobile data usage. He also stressed the need to pair this measure with social protection and productive deregulation to mitigate potential inflationary impacts.
In summary, both agreed that the gradual elimination of universal subsidies must be accompanied by control mechanisms, targeting, and social compensation, while simultaneously ensuring full supply and economic stability.
ENERGY CRISIS AND FUTURE IN BOLIVIA
At the close of the discussion, Raúl Velásquez emphasized that Bolivia’s hydrocarbon crisis originates from the state-driven and rentier policies established after the 2006 “Gas War.” He noted that for nearly two decades, natural gas was treated more as a source of rent than as an energy resource, and the management of 14 interim presidents at YPFB exposed a deep lack of institutionalization and long-term planning.
He warned that the next government will face the challenge of comprehensively reforming energy policy, including a new Hydrocarbons Law and a new Electricity Law, to replace the outdated frameworks of 2005 and 1994. He noted that both political platforms agree on the need to refocus fuel subsidies, ensuring they are not maintained indefinitely and defining who should benefit and how they will be funded.
“Uncertainty remains over whether LPG and natural gas subsidies will continue, as both may soon need to be imported. At the same time, Bolivia must diversify its energy matrix, betting on solar, wind, and hydroelectric power, while recognizing the challenges of intermittency and storage,” Velásquez summarized.
Finally, he highlighted that the medium-term objective outlined by the economic representatives of Alianza Libre and the PDC is to build a balanced electric matrix, combining efficient thermoelectric plants with a greater share of renewable sources. In this context, he said, the new government is expected to reach broad consensus with Congress and energy sector stakeholders to drive a transition ensuring energy security, fiscal sustainability, and national development.
