After several years announcing it, the Bolivian government has decided to approve the Exploration Incentives Law, which is a measure aimed to boost foreign companies’ investments on the Bolivian hydrocarbons sector. The president Evo Morales has confirmed that $3.5 billion will be allocated to this purpose within the next ten years. This has been recently announced by the ministry of hydrocarbons and energy Luis Alberto Sánchez, who has pointed out that projects designed by YPFB and all operators will be boosted. “For each barrel produced there will be a prize or incentive for investors,” emphasized the minister.
According to calculations made by the government, revenues from the hydrocarbons sector would raise 64 percent with this investment. Revenues could totalize $62 billion during the next ten years, which would add $23 billion to the country’s treasure. It is an amount that pretty much duplicates current investments of $36 billion. “The Incentives Law is feasible and is one of the most important policies considering the West Texas Intermediate (WTI) fall,” claimed the minister.
The plan draft points out that those incentives will cover all oil and gas exploration and production projects in traditional and non-traditional zones. Therefore, they cover the whole current and future oil production, the condensate production at new deposits and the increase of condensate production at current fields.
The fund that will support incentives for new explorations will be created thanks to contributions from different entities(Central government, territorial governments, municipalities and universities, among others). The vice-president of Bolivia Alvaro García has requested all of them to allocate five or six percent of revenues from the Direct Tax on Hydrocarbons (IDH) to the project. According to García, “for each dollar granted to the incentive, provinces will receive additional incomes of $8.48; municipalities of $3.69, universities of $3.78, Fondo Indígena of $3.56 and the General National Treasury (GNT) of $4.03.”
For its part, the Federation of Municipal Associations has already confirmed that all the resources obtained from this tax will be allocated to this fund.
Post by: Francisco Neri Bonilla.