ENVIRONMENT BULLETIN-BOLIVIA/BRAZIL: Unite In Energy Projects

By IPS Correspondents Reprint | | Print |

Juan Carlos Rocha

LA PAZ, May 9 1998 (IPS) - Bolivia and Brazil, despite the differences in their economic standing, are joining together in two giant energy projects to sell electricity and natural gas from Bolivia.

More than two decades of political discussions between the two countries that share a border of 3,600 kilometers, are coming to a close with agreement on Bolivian selling 8 million to 30 million cubic meters daily to Brazil.

Arturo Castanos, representative of the Brazilian state-owned company Petrobrasil in Bolivia, says that the Bolivian side of a gas pipeline that will stretch 557 kilometers, is more than 58 percent finished. The pipeline links Rio Grade and Puerto Suarez, in the eastern part of Bolivia.

“There have been delays in certain phases of the project, but in most cases we have been fulfilling the schedule one hundred percent. The lost time can be recovered in order to finish the construction in December and the export of gas can begin next Apr il,” says Castanos.

Another 2,504 kilometers of pipeline is being built on the Brazilian side of the border, which traverses the states of Mato Grosso del Sur, Sao Paulo, Parana, Santa Catarina and Rio Grande del Sur, and will supply chemical industries, petrochemicals, met allurgy and ceramic factories.

The other source of the commercial association – which President Fernando Henrique Cardoso referred to recently as a model of energetic integration for the Southern Common Market (Mercosur) – is the selling of electricity to compensate for Brazil’s lack

of electricity.

This business, like the first, is in private hands. A group of Bolivian energy companies associated with a foreign group announced that it will invest more than 1 billion dollars in one year to export electricity to Brazil.

“Bolivia has great possibilities in terms of exporting electric energy and we will try to export it as soon as possible,” says Julio Leon Prado, one of Bolivia’s most powerful businessmen, who currently represents the consortium.

The Brazilian energy market has an evident strategic importance for Bolivia: given the size of its industrial sector, it is estimated that Brazil’s energy demands are approximately 60,000 megawatts, and that this figure grows yearly by 3.750 megawatts.

In order to generate such a level of power, more than 17 million cubic meters of natural gas is required, which implies an investment of 7.700 million dollars, according to the Bolivian vice-minister of Energy and Hydrocarbons.

Therefore, in addition to exporting natural gas to Brazil, Bolivia will also use part of its reserves to construct gas- powered thermoelectrics along the frontier town of Puerto Suarez, using 2.5 million cubic meters of gas per day. The legal framework f or these projects is a Memorandum of Agreement signed a month ago in Brasilia by the chancellors Javier Murillo, of Bolivia, and Luis Felipe Lampreia, of Brazil, which establishes the opening of the energy market of this country.

The document, signed on April 17 in Santa Cruz de la Sierra by the Presidents Hugo Banzer, of Bolivia, and Fernando Henrique Cardoso, of Brazil, is a sign of the formal commitment between these two countries to assure competitive conditions in the market for electricity providers.

This commitment includes the liberalization of subsidies, duties, and other barriers that could alter the normal conditions of competition, and with prices that reflect efficient economic costs.

With the export of natural gas and electricity, the trade balance between both countries will lean in favor of Bolivia. In 1997, Brazilian exports to Bolivia reached 710 million dollars, compared to 27 million dollars of Bolivian exports to Brazil.