Bolivia’s Gas Nationalization: Opportunity and Challenges

The four memos in this series on Bolivian oil and gas policy and the challenges facing the nation is part of an ongoing project of the Andean Information Network and Erika Weinthal from the Nicholas School of the Environment and Earth Sciences at Duke University examining Bolivia’s efforts to confront the “resource curse.”

Part I: Background on Bolivian Oil and Gas Policy, Current Conflicts, and Challenges
Part II: Political Conflict over Gas and Oil Tax Distribution
Part III.  Increased Gas and Oil Revenues from Nationalization Benefit Various Projects
Part IV.  Accountability and Sustainability

Popular protests in Bolivia demanding greater benefits for the population from the country’s vast natural gas reserves contributed to the resignation of two presidents, the election of President Evo Morales, and the nationalization of the country’s oil and gas industry.  Rather than expropriation, the nationalization consisted of higher taxes on petroleum companies and renegotiated contracts.  As a result of the new policy and high gas prices, the Bolivian government’s income from the country’s oil and gas industry has increased dramatically, nine fold  between 2002 and 2007.

The new funds present an opportunity to Bolivia, the poorest country in South America, to use this income for social and economic development to benefit the population.  But the revenues also present numerous challenges: developing a shared vision for the use of the revenues, determining an equitable distribution of resources, engaging the population and civil society in decision-making, investing resources wisely, and ensuring transparency and accountability – challenges which other resource rich countries have faced and failed.