2. GROUP MEMBERS
• MANOJ SUNAR
• BEL B. B.K.
• ZANNAT SHRESTHA
• CHANDAN K.SARROF
• SAILESH OJHA
3. INTRODUCTION
• Republic of Bolivia a landlocked south
American country
• Rich in natural minerals like silver, gas, iron,
magnesium etc.
• Second largest gas reserves in south america
• Proven resources of 440 millions oil barrels
• Gas reserves of 26.7 trillion cubic feet
4. Bolivian gas war
• Actually started when government carcked down
on coca production
• Ruling president lozada ordered military action
which further escalated the conflict
• Lozada resigned and fled the country
• Mesa was elected which conducted referendum
• Referendum was controversial
• Mesa resigned and then Evo Morales won the
election
6. NATIONALIZATION
• On may 1 , 2006 morales anounced
nationalization decree
• Morales announced the nationalization of the
oil and gas sector with the help of a
presidential supreme decree 28701 called
“Heroes of Chaco”
• Bolivia completed the process of
nationalization after taking control of the 56
oil and gas sites in Bolivia
7. Key Points in the Nationalization
Decree
• Complete power to Bolivian government to set conditions on quantity and
prices for internal requirements or exports, commercialization, and to take
total control on all aspects of oil production and distribution.
• Renegotiation of contracts with all foreign companies with in 180 days
after nationalization so that they would be in accordance with the oil and
gas law number 3058.
• Capture of 51% of the shares from five private companies that were
formed by the division of Yacimientos Petroliferous Fiscales Bolivianos
(YPFB) in 1996.
• Hike in the tax and royalty from 50% to 82% on companies operating in
fields whose registered production average of natural gas (in 2005) was
more than 100 million daily cubical feet.
• Audit on investments and taxes on all oil and gas companies (except Petro
bras, Respol-YPF and Total) so that their taxes and terms of operations
could be reviewed.
8. IMPACT OF GOVERNMENT DECISIONS ON THE BUSINESS AND
FDI
• an expected increase in the share profits of the foreign
companies, which could be diverted to state welfare
programs
• expected to generate more jobs to Bolivians as it was
alleged that some of the foreign companies were
recruiting foreign nationals
• 100% ownership of it as a resource to help build the
country
• nationalization has decreased the foreign investment
• Pertrobar largest oil company in bolivia decided to
freeze all proposed future investments in Bolivia
9. Potential Benefits of Privatization / Nationalization
• Improved Efficiency
• Lack of Political Interference
• Short Term view
• Increased Competition
10. Disadvantages of Privatization
• Natural Monopoly
• Public Interest
• Problem of regulating private monopolies
• No foreign investments
11. FDI AND ITS ADVANTAGE ON ECONOMIC DEVELOPMENT
• FDI allows the transfer of technology- particularly in
the form of new varieties of capita inputs- that cannot
be achieved through financial investments or trade in
goods and services.
• FDI can also promote competition in the domestic
input market
• Recipients of FDI often gain employee training in the
course of operating the new business, which
contributes to human capital development in the host
country
• Profits generated by FDI contributes to corporate tax
revenues in the host country
12. CONCLUSION
• Bolivian state has utilized its hydrocarbon sector to push
economic growth and to institute numerous social reforms
• recent drops in global commodity prices have not
significantly affected Bolivia’s economy
• Nationalization have not significantly deterred investment
• old and new investors have agreed to explore and develop
new oil and natural gas reserves on the Morales
government’s terms
• Government has offer social stability and legitimacy
• natural resource wealth is used as engine of growth and
socioeconomic change.
