Spanish Govt. to Finance Residential Gas Connections

Bolivia's state oil company YPFB expects to sign a US$40mn loan with the Spanish government's development fund Fondo de Ayuda al Desarrollo (FAD) to finance a program to connect an additional 80,000 residential natural gas clients by July 2006, a spokesperson for Bolivia's hydrocarbons ministry told BNamericas.

"We are still in negotiations but they are pretty well advanced," the spokesperson said.

YPFB estimates investment in the program at about US$60mn, of which US$40mn will come from FAD and the remainder possibly from the Chinese government and other sources, the spokesperson said.

"We are negotiating with the Chinese government and various other sources because the idea is to give priority to gas connections for low-income sectors, but for that we need financing," the spokesperson said.

YPFB has invested about US$14mn to connect 21,000 clients in Bolivia since the program began in November 2002. The second phase calls for 80,000 additional connections by 2006. The aim of the program is to increase domestic gas consumption by providing connections for low-income Bolivians who would otherwise not be able to afford them. Of the total 220,000 connections planned in the next five years, most of them, some 117,000, will be in the poorer western part of the country in the cities of La Paz, El Alto, Oruro and Potosí, the spokesperson said.

President Carlos Mesa inaugurated the second phase of the program in El Alto near capital city La Paz on Tuesday, government news service ABI reported.

Of the 80,000 connections planned through July 2006, some 23,000 will be in El Alto, the spokesperson said.

Just days ahead of the national referendum on the hydrocarbons law and gas exports scheduled for July 18, it is no coincidence that the second phase of the program began in El Alto which was a hotbed of civil unrest during the riots in October 2003 that killed dozens and ousted former President Gonzalo Sánchez de Lozada from power.

"It has a special political significance to begin the connections in this area," the spokesperson said. YPFB also began installing gas connections in the city of Camiri in Santa Cruz department this week, the spokesperson said.

YPFB does not have the resources to carry out all the connections planned in the next five years itself, so the ministry had planned to award four natural gas distribution concessions to private companies earlier this year, but suspended the tender until after the national hydrocarbons referendum. The concessions would cover four areas: Santa Cruz, Cochabamba, Sucre, and the area of La Paz, El Alto, Oruro and Potosí. The ministry plans to define the details of the tender in the "weeks and months" following the referendum, the spokesperson said.

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