BOLIVIA Trends and Developments Contributed by: Enrique Barrios, Emil Jung and Nina Leguizamón, Dentons Guevara & Gutiérrez
“energy diversification” rather than “energy transition” – a deliberate policy choice reflecting the view that Bolivia’s hydrocarbon resources, particularly natural gas, remain an essential part of the energy mix and a critical source of fiscal revenue through royalties and the Direct Tax on Hydrocarbons (IDH). The renewable energy agenda encompasses a range of technologies suited to Bolivia’s diverse geography: solar energy in the high-altitude departments of Oruro and Potosí, biomass-based thermoelectric genera- tion leveraging sugarcane production in the tropical departments of Beni and Pando, and potentially wind and geothermal sources in other regions. The law also introduces the concept of distributed generation, enabling households that produce electricity through rooftop solar panels to sell surplus energy back to the grid – a mechanism that, while already operating informally in some areas, would be formalised and regulated under the new framework. Additionally, the government’s broader energy plan includes a structured programme for the adoption of electric vehicles, with an emphasis on investing in distribution infrastructure to avoid the capacity bot- tlenecks experienced in other jurisdictions – such as the United States – where insufficient grid investment has limited EV charging to off-peak hours. Pillar 5 – Bolivia as a regional energy hub The fifth pillar of the Draft Electricity Law positions Bolivia as a regional energy hub, strengthening the country’s generation capacity, cross-border inter- connections and energy exchange with neighbour- ing countries. Bolivia’s central geographic position in South America, combined with its existing pipeline infrastructure – currently underutilised due to declin- ing gas production – provides a potential foundation for regional energy integration. The government has expressed interest in exploring arrangements where- by, for example, neighbouring countries’ gas could transit through Bolivian infrastructure while the coun- try rebuilds its own production capacity. If realised, this vision would transform Bolivia from a net energy importer into a transit and trading hub, potentially attracting infrastructure investment in
cross-border transmission lines and interconnection projects. Investment Climate and Legal Guarantees A central challenge for Bolivia’s electricity reform is attracting private capital to a jurisdiction that has his- torically been perceived as carrying elevated political and regulatory risks. The government appears acutely aware of this challenge. During a state visit to the Unit- ed States in early 2026, senior officials discussed the use of international financial instruments – including political risk insurance against nationalisation or con- tractual breach – to reassure prospective investors. The rationale, as articulated by then Minister Medi- nacelli, is that if a future government were to reverse course, the insured company could recover its invest- ment through the insurance mechanism, thereby de- risking the initial commitment. The proposed framework also contemplates long- term contracts – likely in the range of five years for certain concessions, based on the hydrocarbons model discussed by the government – which would provide a bankable revenue stream that concession holders could present to financial institutions to secure project financing. The overall energy market in Bolivia is estimated at approximately USD3–4 billion annu- ally across electricity, gas, and liquid fuels, offering a market of meaningful scale for mid-sized international operators, even if modest by global standards. The Institutional Challenge: De-Politicising State- Owned Enterprises Beyond the legislative text, a critical determinant of the reform’s success will be the institutional transfor- mation of state-owned enterprises. ENDE and YPFB have long been subject to political-party interference that distorted investment decisions and eroded oper- ational efficiency. The government has acknowledged this dynamic, with Minister Medinacelli observing that “state-owned enterprises are not inherently bad – what damages them is political-party interference” and that ENDE’s obligation “is to give us electricity, not employment.” Plans to institutionalise key positions through merit- based selection processes and to equip entities like YPFB with the governance standards required to
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