BOLIVIA Trends and Developments Contributed by: Enrique Barrios, Emil Jung and Nina Leguizamón, Dentons Guevara & Gutiérrez
Moreover, the principles likely to underpin the Draft Electricity Law can be inferred from the government’s broader legislative agenda. In developing comparable draft legislation for other segments of the energy sec- tor, the government has articulated a set of founda- tional principles that are also expected to shape the electricity reform. These include: • energy sovereignty and security, understood as guaranteeing the permanent availability, sufficiency and reliability of energy supply; • legal certainty ( seguridad jurídica ), encompass- ing regulatory clarity, predictability, respect for acquired rights, the binding force of contracts under the pacta sunt servanda principle, and pro- tection of investment for both national and foreign parties; • regulatory stability, ensuring that the normative framework remains coherent, consistent and rea- sonably permanent, avoiding arbitrary or unfore- seeable modifications that could affect the plan- ning and sustainability of investments; • operational efficiency, promoting development under criteria of productivity, cost optimisation and internationally competitive management practices; • attraction and promotion of investments, generat- ing regulatory, institutional, economic and con- tractual conditions that incentivise both public and private capital participation; and • sustainable development, with an emphasis on responsible resource use, progressive reduction of environmental impacts and adoption of cleaner technologies. If the Draft Electricity Law incorporates these prin- ciples – as appears likely given the government’s consistent messaging across its reform agenda – it would represent a significant departure from the previ- ous framework and provide a more robust institutional foundation for private sector engagement in Bolivia’s power sector. Outlook and Practical Considerations for Investors Bolivia’s proposed electricity reform represents a genuine paradigm shift for a market that has been largely closed to private participation for two decades. The Draft Electricity Law, if enacted in a form broadly
consistent with its stated pillars, would create a fun- damentally new operating environment characterised by competitive generation, independent regulation, transparent auction mechanisms, and the explicit recognition of renewable energy sources. However, prospective investors and market partici- pants should bear in mind several practical considera- tions. First, the bill’s text is not yet publicly available, and the detailed implementing regulations – which will determine critical parameters such as auction design, contract terms, tariff methodology and the ERE’s precise powers – have not yet been drafted. Sec- ond, Bolivia’s track record of policy pendulum swings in the energy sector counsels caution; the country has experienced at least three major reversals in its approach to hydrocarbon and energy management, and any incoming legislative framework will need to demonstrate durability. Third, the macroeconomic environment – including limited dollar liquidity, high state indebtedness and an ongoing subsidy restruc- turing – creates a challenging backdrop for large-scale capital deployment. On the positive side, the government has demonstrat- ed awareness of the need for credible legal guaran- tees, political risk mitigation instruments and market- oriented pricing mechanisms – all of which, if properly implemented, would mark a significant departure from the status quo. The energy market’s estimated annual size of USD3–4 billion and Bolivia’s substantial renew- able energy potential (solar, wind, geothermal, and biomass) create genuine commercial opportunities, particularly for mid-market operators and developers with experience in frontier Latin American markets. The coming months will be decisive. Market partici- pants should closely monitor the legislative process in the Plurinational Legislative Assembly, the content of the implementing regulations as they emerge, and the institutional design of the ERE. Bolivia’s electric- ity sector stands at an important crossroads, and the choices made in 2026 will determine whether the country can attract the private investment it needs to modernise its grid, diversify its energy matrix, and secure a reliable electricity supply for its population and productive sectors.
47 CHAMBERS.COM
Powered by FlippingBook