Bolivia’s juicy foreign investment deal with Jindal
Jindal Steel and Power of India signed July 18 with the Bolivian government the final agreement to build a $2.1 billion integrated steel plant at the El Mutún iron ore mine next to the Brazilian border in eastern Bolivia.
The deal is significant for President Evo Morales’ government because it’s the biggest single investment ever made in Bolivia. The investment is a boost for the government and a snub at those in the hydrocarbons sector that aren’t too enthused about the nationalization program announced in May 2006.
Despite the fanfare many challenges remain. One of the most significant is if Bolivia will have enough gas to supply between 7 and 10 million cu m/d to the plant and 450MW power installation.
Officials like Hydrocarbons Minister Carlos Villegas are striving to assure regional markets that Bolivia will meet its supply agreements with countries like Argentina.
From 2010, Argentina will begin importing an extra 20 million cu m/d from about 5 million cu m/d now. Argentina has an agreement to import from Bolivia 7.7 million cu m/d
Will Bolivia have enough gas to supply rising demand at home (about 5 million cu m/d) and abroad?
Even if the government downplays the risks it’s the single biggest challenge that Bolivia faces.