Bolivia to the rescue? Not quite

Bolivia’s fertiliser ambitions meet reality.

In September of last year, the Bolivian government announced that it would restart operations at the country’s petrochemicals plant, ‘Bulo Bulo’, after years of inactivity estimated to have cost the country hundreds of millions of dollars in lost revenue. This has excited analysts, investors and in particular, Bolivia’s petrochemicals sector, who see a potential export windfall from increased fertiliser production. Bolivia’s president Luis Arce is eyeing political capital too – last week, he claimed that restarting operations would help “guarantee food security.”  

A former director of Bolivia’s central bank explained, “The plant [Bulo Bulo] can produce urea and ammonia which are both used as fertilisers. The country and the region are in dire need of fertiliser after imports were severely impacted by the crisis in Ukraine – most fertiliser imported in Latin America comes from Russia. The challenge for Bolivia is that the plant is plagued by infrastructure problems, a lack of technical expertise and poor transport arteries that would have otherwise facilitated efficient export chains.”

The plant [Bulo Bulo] can produce urea and ammonia which are both used as fertilisers. The challenge … is that [it] is plagued by infrastructure problems, a lack of technical expertise and poor transport arteries …”

A former director of the central bank, Bolivia 

Bulo Bulo was a flagship project for the ruling MAS party under the leadership of then-president Evo Morales. It cost around USD 1 billion as Bolivia looked to cash in on the potential for high returns given elevated global demand for gas and derivative products. Like many such projects in Bolivia, it never quite got off the ground.  

As fertiliser shortages are affecting the region – Brazil’s agriculture minister argued for the product to be exempt from Moscow-focused sanctions – eyes have turned to Bolivia to see whether production output could be stepped up. The state-owned Yacimientos Petrolíferos Fiscales Bolivianos (“YPFB”) indicated in May 2021 that companies from Brazil, Argentina, Paraguay, Peru and Uruguay are interested in buying Bolivian urea which allows the growth of crops such as rice, corn, wheat, sugar cane, potatoes, and fruits and vegetables. 

A hydrocarbons expert reflected, “Commercially, the biggest operational problem of the plant was that not a single export contract was ever signed. The plant nor the industry have experience in this regard. We are talking about a billion-dollar facility with virtually no foreign investment nor involvement. When things finally did get up and running, revenue was far lower than projected.”

“…the biggest operational problem of the plant was that not a single export contract was ever signed. The plant nor the industry have experience in this regard. When things finally did get up and running, revenue was far lower than projected.”

A hydrocarbons expert, Bolivia

In export terms, Brazil has always been the most obvious buyer for Bolivia’s ammonia and urea. Not only because of geographical proximity but also because of the size of its market complemented by a sophisticated logistics infrastructure. Almost 75% of exports in 2018/19 went to Brazil, 20% to Argentina and the remainder to Paraguay and Peru. “But in 2020 all this fell, not because of the pandemic but because the plant stopped operating. Of 75,000 tons in 2019 it went on to export 4,000 in 2020 and only rose to 30,000 in 2021,” added the hydrocarbons expert.  

“As a result of all the poor planning of the governments of Morales and now Arce, there is no more urea to export. As things are, it will be difficult to sign more contracts. It is a shame because this product will be one of the most in demand in 2022-2023, but Bolivia will not be one of the big players,” adds the former central bank director. Unwelcome news for Bolivia is unwelcome news for the neighbourhood – regional crop growers will need to continue their desperate search to fill the void.   

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