La Paz, September 6, 2026 — Bolivia has been grappling for some time with a chronic fuel shortage, with diesel in particularly short supply. The obvious question is: what is the government’s plan —assuming there is one— to tackle this enormous challenge?
The Problem in Numbers
A few key figures help put the scale of the crisis into perspective.
- Dependence on imports. Bolivia produces only about 10% of the diesel it consumes.
- Who consumes the diesel? According to Bolivia’s National Statistics Institute (INE), transportation accounts for 80% of diesel consumption, agribusiness for 15%, and mining for 5%.
- Subsidies and distortions. Successive governments have traditionally subsidized diesel, keeping its domestic price artificially low in an effort to contain the cost of living. The policy, however, comes at a high cost: it drains scarce foreign currency and provides a powerful incentive for smuggling fuel into neighboring countries.
- The economic impact. The immediate consequence is a chronic shortage at fuel stations, disrupting some of the country’s most important productive activities, particularly mining and agribusiness.
- An institutional crisis. State-owned YPFB is effectively bankrupt. It has accumulated more than US$1 billion in debts to suppliers and is burdened by serious problems of inefficiency and corruption.
The Government’s Strategy: When Prudence Becomes Paralysis
The measures adopted by the government so far have been partial, insufficient, and at times erratic. Above all, they reflect an excessive reliance on gradualism in a situation that calls for immediate action.
- Domestic production and investment. Producing more diesel at home would require investment in exploration and production, backed by risk capital that YPFB simply does not have. Attracting foreign investment, in turn, would require regulatory reforms and greater legal certainty, both constrained by the current Constitution. In short, there is no realistic short-term solution on the production side.
- The energy transition. Expanding the use of electricity —preferably generated from renewable sources— can help, but only to a limited extent. Transportation, agricultural machinery, and mining equipment cannot simply be electrified overnight.
- The Gordian knot. There is broad agreement, both within the government and among the public, that the subsidy lies at the root of the problem and must eventually be eliminated. The real dilemma is how to do so without triggering a social explosion —and how quickly.
- A bet on gradualism. The government plans to eliminate fuel subsidies altogether beginning in January 2027, bringing the retail price of diesel into line with international prices, adjusted at the official exchange rate.
- The transition limbo. Yet with only four months left before 2027, Bolivia remains trapped in an awkward transition. During this period, fixed prices differentiated by type of consumer remain in effect, while diesel continues to be heavily subsidized —accounting for more than 80% of consumption— without putting an end to the endless queues or chronic shortages.
- Intervening in YPFB and the ANH. The government’s deep frustration with inefficiency and corruption in the supply chain for imported fuels has led it to intervene in both YPFB and the National Hydrocarbons Agency (ANH). The stated objective is to dismantle corruption networks entrenched in the two institutions and clean up the logistics and distribution chain. The government says it has produced concrete evidence —rather than mere allegations— of discretionary allocations of diesel quotas, manipulation of computerized control systems, and acts of internal sabotage allegedly carried out by officials from the previous administration.
- The outlook. Ultimately, these interventions are intended to improve fuel supplies during the remaining months of the transition, while the subsidy is still partially in place, until the new pricing and distribution system takes effect. That new system is reportedly expected to rely largely on private companies.
The great unanswered question is simple: will they succeed?
Best regards,
Francesco