On July 7 2000, the Bolivian government issued Supreme Decree 25,835 aimed at mitigating the impact that the worldwide increase in oil prices will have on the economy.

According to current regulations the domestic price of oil is determined by its international price. Recent increases of oil prices have caused unrest particularly in the agriculture and transportation industries. These industries use diesel oil as their main combustible.

Social pressure forced the government to implement a mechanism that allows for lower prices of diesel oil and gasoline. This mechanism directly benefits the so-called 'great consumers of regulated products'.

Any individual or entity (whether local or foreign) that purchases at least 20,000 litres of diesel oil in a single transaction and exclusively for its own consumption or for its affiliates, may qualify as a great consumer of regulated products.

Applicants must also obtain a certificate from the regulatory authority, the Superintendency of Hydrocarbons, by providing evidence that they have storage capacity for a minimum of 20,000 litres, among other requirements. The authority may inspect the use of the hydrocarbons purchased by the applicant.

This mechanism has brought an end to the social disorder that resulted from the recent increase of oil prices, but the effects of this measure on the economy are still to be seen.

For further information on this topic please contact Ricardo Indacochea at Indacochea & Asociados, Abogados by telephone (+59 135 353 56) or by fax (+59 135 812 00) or by e-mail ([email protected]).

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