7.500
%
Negative
94
mm boe
11
%
The endemic corruption and pernicious nationalisation mean that the investment environment is poor. Once democratic process is restored, and the country moves away from socialism, will there be an appreciable change in the investment climate.
January 25, 2024
Americas - South
mm bbl
bcf
Central South America, southwest of Brazil
Multiple (PSC/Concession)
An 18% royalty and 32% IDH (Direct Tax on Hydrocarbons) applies to each field, creating a combined 50% effective royalty on each field. Cost recovery in any given month is the lower of allowable recoverable costs and the net revenue multiplied by a factor (100% for most fields, certain fields have lower limits). Profit oil splits are on a sliding scale, based on production levels and a so-called B-factor, measuring cumulative revenues and depreciations over cumulative investments and taxes/royalties paid (excluding VAT). Rates vary from field to field, under the principle of increasing government take with increasing project level of payback. Following the profit split, an operator's income (not including cost recovery) is also subject to corporation tax.
Enforcement of laws regarding dispute settlements, intellectual property, and real property are lacking, creating legal discrepancies and inconsistent enforcement, and therefore, an uncertain investment climate. Furthermore, Bolivia’s judicial system is increasingly compromised, making judicial recourse for investment disputes challenging. Bolivia’s weak judicial security, complicated regulatory systems, cumbersome bureaucratic procedures, and corruption adversely affect the private sector and impede investment in Bolivia. The state’s growing presence in economic activity has moved the economy ever further from free-market openness.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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