Bolivia’s Economic Pivot: Reviving the Energy Sector

Lucas Lamby, Lucila Venturi, Jose Ignacio Hernandez and Ricardo Hausmann
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Lucas Lamby: Center for International Development at Harvard University

No 263, Growth Lab Working Papers from Harvard's Growth Lab

Abstract: Bolivia’s energy system is in structural decline. Natural gas production has fallen 54% since its 2014 peak, collapsing export volumes and turning hydrocarbons from a fiscal engine into a net drain on reserves. The cause is institutional, not geological: the 2005–2009 nationalization cycle increased state revenue capture during the commodity boom but weakened the incentives for long-term exploration. Fuel and domestic gas subsidies compounded the problem, distorting price signals and crowding out renewable investment. The current administration’s January 2026 fuel reform raised diesel prices by 163% and gasoline by 86%, but the heightened global oil prices have displayed the remaining structural weakness and domestic gas subsidy remains untouched, costing Bolivia over $900 million in forgone export earnings in 2025 alone. The reform agenda requires three priority actions: embedding fuel prices in a rules-based formula; restructuring hydrocarbons contracts to restore exploration incentives; and accelerating renewable energy deployment to free up natural gas for export.

Keywords: Bolivia; energy (search for similar items in EconPapers)
Date: 2026-04
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