Bolivia Ends Diesel Subsidy, Moves to Unified Pricing to Ease Fuel Crisis
Bolivia has scrapped state diesel subsidies, shifting to a unified pricing model to tackle chronic fuel shortages and smuggling.
Bolivian President Rodrigo Paz announced on Friday that the government is ending state subsidies on diesel and moving the country to a single, unified pricing system, a step his administration says is needed to resolve long-running fuel shortages.
Under the new arrangement, diesel will be sold at the price Bolivia pays to buy it abroad. Paz said the country imports about 90 percent of the diesel it consumes, while the government has been spending roughly $55 million every week to keep prices down.
"Starting today, diesel will cost what it costs us to buy abroad," Paz said, pointing to widespread fuel smuggling and black-market reselling as major reasons for the recurring weekly shortfall.
The decision replaces a dual-pricing system introduced in August, which charged large-volume consumers 18 bolivianos ($2.60) per litre while other buyers paid a subsidised rate of 9.80 bolivianos.
Paz said domestic prices will now follow global benchmarks, meaning they could fall if international costs come down.
To soften the impact on households and important sectors of the economy, the government also announced targeted relief measures, including direct cash transfers and preferential credit lines.