Bolivia's Private Sector Rejects Hydrocarbons Bill

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Bolivia's national hydrocarbons chamber (CBH) rejects President Carlos Mesa's 14-part hydrocarbons bill, CBH said in a statement on behalf of its members.

CBH listed the reasons behind its opposition, the main one being that the bill gives a period of 180 days for companies to modify their existing contracts in line with the new proposed regulations.

CBH says existing contracts should be untouched by the new law. The bill "unilaterally imposes forced and obligatory migration of existing concessions to new types of still unknown contracts for exploration, production and commercialization of hydrocarbons," the statement said.

That bill would see the re-nationalization of upstream companies Andina and Chaco as well as transport company Transredes, increasing royalties and taxes on hydrocarbons production to 50%.

It would also create a new regulator called Petrobolivia which would relieve state oil company YPFB of its regulatory duties and would be responsible for signing hydrocarbons contracts on behalf of the state.

Although companies are prepared to accept some changes for new contracts, such as higher taxes, the move to force companies to change their existing contracts to comply with the new regulations "violates the faith of the state and pre-existing rights legally acquired" by the companies, the CBH statement said.

The new bill's fiscal regime "not only undervalues the worth of investments made to date, but makes the future development of existing fields unviable and eliminates the possibility of investments in new projects," CBH said.

In general, the private sector feels that the bill "harms the legal security and discourages future investments on the part of the private sector by imposing a legal framework in which companies are seen forced to operate under the auspices of an excessively interventionist state," the statement said.

The private sector considers that it is possible to elaborate a new legal framework that "respects the rights" of companies and that does not "disable the Bolivian oil industry."

The economic development committee in Bolivia's congress began on Wednesday to formally analyze the bill, government news agency ABI reported.

Mesa presented the bill to replace a previous bill he had presented in early August, which was based on the results of a national referendum on gas exports held in July. Mesa had to come up with a new bill that laid out the legal framework for the proposed changes because of criticism in congress that the original bill did not have a legal foundation and therefore could not replace the existing hydrocarbons bill, a spokesperson for the hydrocarbons ministry told BNamericas.

Congress has created four sub-commissions, formed by government and YPFB executives, to study different parts of the bill, the spokesperson said. If there are no setbacks congress could approve the bill by late September and it could be dispatched to the senate for final approval by mid-October, the spokesperson said.

President Mesa wants the bill to be passed by the second week of October at the latest, "because there are a series of sizeable obligations with respect to Bolivia's international commitments," he said.

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