Bolivia & private energy firms operating in the country have signed contracts that will see the govt. getting larger share of profits of energy companies.

Evo Morales, the Bolivian president, has signed law contracts giving the govt. control over overseas energy firms operating in the country, thus completing the process that begun in May 2006 with nationalization of Bolivian petroleum industry.

In October 2006, 10 firms including Repsol YPF, Total & Petrobras signed agreements to continue their operations in Bolivia & agreed to provide a higher profit share to the Bolivian govt.

Through new contracts, Bolivian govt. will get, 70 % of gross income on an average & the rest 30 % will go to private firms. It is estimated that the new contracts would see around US$ 67 Billion worth of revenues for Bolivian govt. by 2026.

Mr. President has promised to invest the earnings for bringing prosperity in the poorest South American nation despite having the second largest oil reserves in the continent after Venezuela.

Mr. Morales recently visited Nigeria that is quite similar to Bolivia in terms of poverty despite of vast energy reserves. He said that implementation of nationalization process like Bolivia's could be a strong factor in lifting oil-rich Africa from poverty.

Bolivia is among the nations with highest certified but untouched energy reserves. Earlier in 1996, a law was formed which allowed foreign energy firms to exploit vast and untapped petroleum reserves of Bolivia.

With help from US, Bolivia opened doors of its natural gas sector to overseas investors in 1996 & over US $ 2 Billion worth of FDI followed. But Bolivia still didn't have greater control & benefits over its vast natural gas reserves. There was expropriation of country's energy reserves without much compensation to the government. Royalties collected from energy firms accounted for just 18 %.

"Majority of discoveries of Bolivian natural gas reserves were made after 1998. The problem is that these resources are untapped because of limited markets in Bolivia. Natural gas market is so small that it is unable to absorb country's output. It is estimated that just 25% of country's gas reserves would be absorbed by 2026," said an analyst at RNCOS.

"However, this can change", the analyst added, "with the new contracts & if the country is able to increase its energy exports. Potential markets for exports include Brazil, Chile, Argentina, Uruguay, Paraguay and USA."

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