Bolivia: Head of Hydrocarbons Ministry, State Petroleum Company Resign, Raising Questions about Commitment to Nationalization

NotiSur - South American Political and Economic Affairs, September 29, 2006 | Go to article overview

Bolivia: Head of Hydrocarbons Ministry, State Petroleum Company Resign, Raising Questions about Commitment to Nationalization


Bolivia's crucial hydrocarbons sector underwent turnover in its top positions in August and September, with President Evo Morales replacing both the minister of hydrocarbons and the president of the state petroleum company. The head of Yacimientos Petroliferos Fiscales Bolivianos (YPFB) resigned after opposition political figures had presented charges of corruption against him. Hydrocarbon Minister Andres Soliz, having faced censure in the Congress, resigned days later when his superiors reversed a resolution of his that had intensified conflict with Brazil. Critics say the overturn is a serious rollback in Morales' project to "nationalize" the country's natural resources. The resignations mean that the team that originally had been assigned to manage the nationalization of Bolivia's gas resources has been completely replaced.

YPFB head removed after opposition makes allegations

The president of YPFB, Jorge Alvarado, resigned on Aug. 28 amid a probe into a contract with a Brazilian company, marking a setback in the drive to nationalize the country's hydrocarbons industry. In his letter of resignation, read at a press conference in La Paz, Alvarado wrote that the accusations against him were "an attack by the oligarchy and the reactionary right wing" aimed at halting the nationalization process. He said he was resigning "to avoid causing any further harm to the great ideas for change in our country."

Alvarado was one of the key figures in leftist President Morales' drive to nationalize the nation's hydrocarbons industry, but his leadership of YPFB has come under increased scrutiny as nationalization has run into trouble.

The Bolivian government acknowledged that Alvarado had violated the terms of the May 1 nationalization decree by having YPFB contract to export crude oil through an independent Brazilian firm.

Opposition members of the Bolivian Senate voted Aug. 23 to open an investigation of Alvarado. Morales said Aug. 28 that Alvarado had committed "no act of corruption, nor harmed the state," and he alleged there was a "conspiracy" among opposition figures and international petroleum interests to slow down Bolivia's nationalization process.

Former YPFB vice president Juan Carlos Ortiz Banzer stepped forward to fill Alvarado's position.

Under Morales' nationalization decree, YPFB is required to assume control of every stage of the production process. Foreign companies were given six months to cede operational control to YPFB or leave the country (see NotiSur, 2006-05-12). Earlier in August Bolivia announced that the "full effect" of nationalization would be suspended while YPFB underwent a complete reorganization and sought US$180 million in emergency financing.

Critics say YPFB lacks the resources or technical know-how to manage Bolivia's natural-gas reserves on its own.

Hydrocarbons minister quits over Petrobras negotiations

Hydrocarbons Minister Andres Soliz had tendered his resignation the week before Alvarado stepped down after being censured by the Congress for nationalization's limited progress, but Morales rejected his offer to resign. But Soliz and a number of his loyalists definitively left government once Vice President Alvaro Garcia Linera overturned a decree by Soliz to strip Brazil's state-controlled oil company Petroleo Brasileiro SA (Petrobras) of the right to export fuel from its Bolivian refineries. Three other officials resigned along with Soliz, according to La Paz newspaper La Razon.

The government named Carlos Villegas, former minister of planning and a loyalist in Morales' Movimiento al Socialismo (MAS), to head the effort to exert more control of foreign oil and gas facilities, although some critics regarded his role as exerting less control as the president needed help in international negotiations. Villegas was sworn in Sept. 15.

Soliz said in a letter posted on the ministry's Web site that he was resigning for "personal reasons. …

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