Juan Fernando Subirana and Miguel Fernández, two energy sector analysts, highlight the complexity of Bolivia’s economic crisis, emphasizing that it is far from being a recent phenomenon. Instead, it stems from over a decade of policies marked by persistent public deficits and a lack of long-term planning.
ISSUE 137 | 2024
Vesna Marinkovic U.
The Bolivian economy is facing a structural crisis that, far from being a recent occurrence, is rooted in more than a decade of policies characterized by constant public deficits and the absence of long-term planning. This has created an environment of uncertainty, exacerbated by declining international reserves and the volatility of the parallel market, according to energy analysts such as Miguel Fernández and Juan Fernando Subirana, who offer their insights into the national reality.
For Fernández, the energy sector is a central element of this crisis, having swung continuously between capitalization and nationalization models. These back-and-forth decisions, in his view, have led to inefficiencies and recurring structural problems, leaving the country in a critical situation. “For example, we’ve missed key opportunities to make renewable energy more competitive and to manage energy subsidies efficiently,” he stated.
PROPOSALS FOR HYDROCARBONS
Juan Fernando Subirana, in turn, highlighted the need to update Law 3058 as one of the proposed measures to address this crisis. “This legal framework, which is crucial for the hydrocarbons industry, must be adapted to the current context to attract investment and foster competitiveness,” he said. He also stressed the importance of strategically managing the reversal of the Bolivia-Argentina pipeline flow, which could position the country as a key player in transporting gas from Vaca Muerta (Argentina) to Brazil.
With existing infrastructure and human expertise, Bolivia could capitalize on this opportunity and become a hub of regional interconnectivity, Subirana emphasized.
THE ENERGY TRANSITION AS AN OPPORTUNITY
Paradoxically, according to Fernández, the crisis has indirectly driven the development of renewable energy and new technologies, such as electromobility and distributed generation. While he acknowledged that progress in Bolivia remains limited, he emphasized that rising fossil fuel prices are making the adoption of clean alternatives more competitive. For instance, he noted, the use of photovoltaic solar energy and electric vehicles has accelerated, particularly in sectors where gasoline prices have reached unsustainable levels.
In this context, Fernández remarked that Bolivia’s energy transition is happening, so to speak, “under duress,” amidst uncertainty about the short-term reactivation of gas fields in the country and mounting environmental pressures.
BREAKING THE CYCLE OF EXTREMES
The perspective shared by both analysts made it clear that a key point in the debate is the need to move beyond the constant oscillation between state-driven and market-oriented approaches, as well as between hydrocarbons and renewable energy. Fernández argued that this back-and-forth has hindered the development of a coherent and sustainable strategy for the energy sector and the broader economy.
As the year comes to a close, Bolivia faces the challenge of turning the crisis into an opportunity to reform its energy sector and build a more sustainable economic model. The transition to renewable energy, combined with strategic management of hydrocarbons, could be the key to overcoming current difficulties and ensuring a brighter future for the country.
“Bolivia faces the challenge of turning the crisis into an opportunity to reform its energy sector and build a more sustainable economic model…”
RECOMMENDATIONS FOR THE FUTURE
1. Balance and sustainability: Bolivia needs to combine the best of both models: an efficient state sector coexisting with a market that fosters investment. This requires clear and stable policies.
2. Attractive regulatory framework: Updating Law 3058 will not only attract investments but also promote the diversification of the energy matrix toward renewable sources.
3. Opportunities for growth: Tax incentives, targeted subsidies, and awareness campaigns can accelerate the transition to clean technologies.
4. Regional infrastructure: Strengthen gas and energy transport projects that enhance Bolivia’s position as a key player in South America.
5. Integration of renewable energy: Focus on large-scale projects that create jobs, reduce costs, and decrease dependence on hydrocarbons.
6. Energy governance: Establish transparent governance mechanisms to ensure efficient and responsible management of energy resources.
“…the crisis has also indirectly driven the development of renewable energy and new technologies, such as electromobility and distributed generation.”.
