Free Importation and Marketing of Fuels

Bolivia is currently facing a widespread fuel shortage (i.e., diesel and gasoline) that has led to long lines at gas stations, and consequently, the entire production chain of goods and services has been affected. In fact, just a few days ago, public services in the city of Santa Cruz de la Sierra were reduced to 40% due to the lack of fuel.

In response to this situation, on November 13^th the government issued Supreme Decree No. 5271, with the aim of deregulating the fuel market in Bolivia. Specifically, this Decree allows the free importation and marketing of fuels by individuals and private companies.

Below, we highlight the key aspects of Supreme Decree No. 5271:

• Scope of Application: The Decree regulates the importation of fuels for marketing in Bolivia. This point is of particular importance, given that until now, fuel imports were only allowed for personal consumption, with specific legal provisions and regulations.
• Authorizations and Permits: Individuals and/or companies wishing to import fuels for commercialization in Bolivia must obtain authorizations from the National Hydrocarbons Agency (ANH) and the Vice Ministry of Social Defense and Controlled Substances. It is expected that the ANH and the Ministry of Government will issue regulations on this matter within the next 5 days.
• Duration and Validity: In principle, the Decree will come into effect once the ANH and the Ministry of Government issue the regulations mentioned above (i.e., within the next 5 days). The Decree has a predetermined duration of one calendar year. Therefore, it is possible that the free importation and commercialization will only be feasible for that period.
• Fuel Quality: It is important to highlight that the fuels to be marketed in Bolivia by private individuals and/or companies must meet the quality standards set forth in the Fuel Quality Regulation, approved by Supreme Decree No. 4771. In this regard, it is expected that the ANH will conduct control activities related to this requirement.
• Prohibitions: Those engaged in the importation for fuel marketing in Bolivia are prohibited from offering the fuels provided by the government at subsidized prices to the public (i.e., reselling them). In line with this, the Decree states that the ANH will establish indicators to distinguish these fuels.

In our opinion, this prohibition could be significant in considering the commercial strategies of certain companies (e.g., fuel vendors will have to decide whether they prefer to distribute the subsidized fuels provided by the government or, in some cases, those imported privately).

• Price Control: The Decree seems to suggest that the ANH will establish the prices for the "free" commercialization of fuels in Bolivia. These prices will be calculated based on a methodology approved by the Ministry of Hydrocarbons and Energy.
• Special Tax: The importation of fuels for commercialization will be subject to specific rates for the Special Tax on Hydrocarbons and Derivatives (e.g., the importation of gasoline for automobile engines will be subject to a rate of Bs. 0.25 per liter).

Given the above, it is evident that this is a new opportunity for the energy sector in Bolivia. At Dentons Guevara & Gutiérrez, we are well-positioned to assist our clients in navigating these new regulations and any that may arise from them, drawing on our more than twenty-five years of experience assisting the energy industry.