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BOLIVIA
Gas war drags on
José Antonio Aruquipa
9/23/2004
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Gas companies call Mesa’s new draft of hydrocarbons law a “confiscation”.

Two months after the July 18 referendum on gas exports — the results of which gave wide support to the government — the legislature’s drafting of a new hydrocarbons bill, which President Carlos Mesa said must embody "a faithful interpretation of the people’s will expressed in the referendum," appears destined to suffer daily modifications.

 

So far, at least 10 versions of bills have been presented in Congress to replace Hydrocarbons Law 1689 — dated from the first government of former President Gonzalo Sánchez de Lozada (1994-97 and 2002-2003) — all of which, their authors say, "reflect the citizens’ mandate."

Government proposals

The government, meanwhile, published two drafts of the law: one denominated "the short law" consisting of 32 articles, rejected in late August by Congress which decided it did not truly reflect the mandate given in the referendum and a second, longer version which it presented several days later.

The latter includes the recovery for the state of the hydrocarbons at the well site and the application of a Complementary Tax on Hydrocarbons, increasing to 50 percent the tax on the income of oil companies.

Similarly, with the new law the companies would be required to "migrate" or adapt to new contracts with new investment rules.

The companies that drill for oil and gas in Bolivia — backed by 78 joint-venture contracts in effect for at least 40 years under the now-repealed Law of Hydrocarbons 1689 — reacted with concern to the presidential initiative.

Raúl Kieffer, president of the National Hydrocarbons Chamber, which represents the 13 foreign companies that explore and drill for gas in Bolivia, called the executive branch’s latest draft law a "confiscation."

Mesa’s bill "is far from being a law that will benefit Bolivia…Any migration (of contracts) in any part of the world is done on a voluntary basis. Otherwise, and as proposed by the bill or in the (president’s) speech, it is obligatory and this represents a confiscation (of property), that is it is a unilateral abrogation of contracts," Kieffer said.

Gas sales face obstacles

The extraction of enormous gas reserves offers hope to 56.7 percent of the 8.2 million Bolivians living in poverty — without health care and education and who face an unemployment rate of 9.5 percent (of the urban workforce).

In late 2003, state-owned Yacimientos Petrolíferos Fiscales Bolivianos confirmed that in south of the country there are 54.9 trillion cubic feet of certified natural gas reserves.

But the possibilities of exporting the resource to US markets could be impeded by growing wave of criticism against the oil companies and the doubts of a government that appears determined to do anything to maintain its popularity.

Inspired by the polls, which give him 57 percent support, Mesa decided to freeze negotiations to export Bolivian gas through a Chilean port and opened the possibility of exporting through the port of Ilo, in southern Peru, despite the fact that the costs of implementing this project would be higher.

The eventual choice of a Chilean port to export Bolivian gas unleashed protests that led to the downfall of Sánchez de Lozada last October. Since 1879 Bolivia has demanded its right of access to the sea snatched by Chile in the War of the Pacific.

"If the sale of gas via Chile were up for consideration, they (the Bolivian people) would simply say no, if they are very polite, but besides they would kick me out of Government Palace," Mesa said.

The situation was complicated for Mesa by the "reappearance" of Sánchez de Lozada on Sept. 12, a week before his political trial in Congress was to begin. The former president is accused of genocide and of having violated constitutional guarantees during the protests in October of last year that left 80 people dead.

Sánchez de Lozada demanded in a brief message taped in the United States and transmitted by local television that the events leading to his resignation and flight from the country be clarified.

"We need to investigate in depth the role of all the players, what their responsibilities were and I am the first who wants to clarify and respond for my actions," he said.

Ombudsman Waldo Albarracín described the former president’s message a "defense strategy to avoid being tried for his responsibility…it is not enough to ask for an investigation, but he needs to appear before the country to inform and respond to the accusations against him."


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President Mesa faces hard time
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