MercoPress. South Atlantic News Agency

Bolivia: Change to Oil Law

A tax increase on foreign oil companies operating in Bolivia was signed into law yesterday by President Eduardo Rodríguez, raising the total charges from 38 percent to 50 percent effective immediately.

Presidential Chief of Staff Iván Avilés estimated the new law could double the country's annual income from its oil resources, which now stands at US$118 million. Sen. Hugo Carvajal, a supporter of the legislation, has said the new taxes could bring as much as an additional US$400 million (307 million euros) each year to South America's poorest country.

The legislation was passed by Congress in May amid massive street protests that triggered the resignation of President Carlos Mesa, who was succeeded by Rodriguez. The law maintains an 18 percent royalty paid by the companies but increases the non-deductible tax levied on them from 10 to 32 percent, for an effective 50 percent total tax.

One of three decrees signed by Rodriguez along with the legislation orders the armed forces and police to provide security to avoid disruptions of oil production such as those caused in recent months by protesters demanding the outright nationalization of the oil industry.

The main foreign companies operating in Bolivia are the Spanish-Argentine consortium Repsol-YPF, Petrobras of Brazil, Total Fina of France, British Petroleum and British Gas.

Oil companies have warned the tax increase will curtail future investment and halt production at oil and gas fields which will now be unprofitable.

General Elections in december?

Lawmakers opened a congressional session yesterday aiming to set a date for an early presidential election in an attempt to resolve a political crisis that has forced the ouster of two presidents in two years. Congressmen began what was expected to be several days of debate on an early election, which was a key demand by the leaders of two weeks of street protests that drove President Carlos Mesa from office earlier this month.

House of Deputies President Mario Cosso, speaking with reporters ahead of the special session, said lawmakers had reached a preliminary agreement to hold congressional elections on the same day of the vote to choose a president. "We're going to focus on holding general elections in December and that will be the basis for deciding other issues," he said.

Lawmakers also were expected to discuss other protester demands, including calls to create a constituent assembly to rewrite the constitution and nationalize the country's oil industry. Setting a date for elections would fulfill a pledge by caretaker President Eduardo Rodriguez, who took office on June 9 after Mesa resigned following weeks of protests by indigenous groups, labor unions and peasant farmers.

Rodriguez, a former Supreme Court chief, assumed the presidency as the third in the line of succession after two congressional leaders stepped aside. Mesa was thrust into office in 2003, succeeding Gonzalo Sanchez de Lozada, the former president, who resigned after street protests over his plan to export the country's natural gas reserves left at least 60 people dead.