Bolivia has experienced significant economic growth and reduced inequality over the last decade due largely to high commodity prices and reforms. However, energy subsidies have also increased dramatically and now represent a large burden on the budget. Reforming energy subsidies could free up funds for increased investment, targeted social programs, and incentives for clean energy development to reduce emissions. But subsidy reform may face public opposition and will require communication, gradual implementation, and measures to support vulnerable groups and green technology.

1. FUELING
BOLIVIAN
DEVELOPMENT
A plea for energy subsidy reform

2. Bolivian success in the last decade
From 2001 to 2012,
GDP *3,4
State income: * 4,3
Social redistribution through
social subsidies *6,2
Almost 2 million Bolivians out
of extreme poverty
Sensible increase in basic
services access and coverage
Reduction of inequities

3. Factors of success
• Conjectural: in particular high gas & oil prices
• Streamlined national development plan: coordinated
investment in infrastructure
• Increase domestic Resource mobilization throughTax
reform: broaden contributing base, reduce loopholes and
increase public participation and income in strategic resources

4. A social oriented model where strategic sectors generate surplus
redistributed in infrastructure development and social policies
• The State as articulator
• Strong pillar of domestic resource mobilization
• Control of macro-economic factors, strong increase in
national money share (credit and saving)
• Increase access of private sector to credit
• Increased ODA mobilization (in particular credit) and direct
private investment
The Bolivian model of development
Direct social
subsidy
distribution
multiplied by 6 in
10 years

5. The Bolivian model of development:
the redistributive engine

6. BUT…

7. At the same time
■ Energy subsidies (in particular oil& fuel have been multiplied by
more than 20!
■ In 2001, they represented 3% of the national budget, in 2012 19%

8. Energy subsidies
■ Does not reach the most vulnerable
According to aWEC study, only 5% of energy subsidies in the world
reach the poorest
■ Does not incentivize energy efficiency and low carbon
development
With one of the biggest per-capita emissions of the LAC region,
Bolivian energy consumption matrix is to be reformed. It is
particularly true of the transport sector which represent around 35%
of energy consumption
■ Are a strong burden on the national budget
In Bolivia, they are comparable to the cost of the pension fund
system or to half the total personal cost of the BolivianState

9. Subsidy reform would allow
■ Increased available budget and reduced debt
Energy subsidy represent around 10% of the annual investment of the ambitious
national development plan 2016-2020
■ More social redistribution
Energy subsidy should be reformed, to allow targeted subsidy reaching most
vulnerable groups or economics actors
■ Reduced contamination and mitigation of climate change
Reformed energy subsidies should target energy efficiency andGHG reduction,
those allowing to catalyze additional funding such as climate funds and finance
■ Nevertheless the reform might be difficult
In Bolivia, several intents to reform fuel subsidies results in public manifestations,
opposition and strikes. Last one in 2010 when the government intent to
drastically reduce subsidy on new year eve…

10. What would be required for a
subsidy reform
Communication,
preparedness and
buy-in
Additional
measures
■ Progressivity of reform
■ Targeted subsidies
(including social and
environmental factors)
■ Private sector window:
– Technology transition and
development
– Seed founding
– Enabling environment for
CleanTech