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PIPEDREAM: The Bolivia-Paraguay gasline

March 20, 2009

If there is one pipeline that will probably never be built, it is the Bolivia-Paraguay line. According to some official Paragayan estimates in 2006, the pipeline would cost $400-$500 million to build. If you add a petchem and fertilizer plant, the pricetag rises to a lofty $3.5 billion!

On Thursday in La Paz, Bolivian and Paraguayan officials agreed to move ahead with the construction of the Bolivia-Paraguay pipeline, according to state-owned newsagency ABI. Paraguayan Foreign Mininster Alejandro Hamed went a bit further, claiming that the pipeline would be built to Uruguay.

Paraguay has spoken for years about importing piped gas from Bolivia. The project has only grown on paper and at press conferences.

A simple question: Why does Paraguay need gas if it generates more power than it can consume thanks to the Yacyreta and Itaipu hydropower plants? Instead of building costly pipeline infrastructure, why doesn’t state-owned power company Ande build a few 500kV lines from the binational hydropower plants to the capital Asuncion to plug chronic shortages in summer?

Every now and then some Bolivian and Paraguayan officials get together, hold a press conference, and they jointly state the importance of building a pipeline between both countries.

If you ever hear or read about such a pipeline project, tret it with tweezers because it does not make any economic sense. Another important matter to keep in mind is that all the pipelines from Bolivia and Argentina that go to Brazil extend around Paraguay, not through it.

Why? Because Paraguay lacks adequate foreign investment laws, transparency – and effective energy planning.

The article can be reprinted as long as as the source is cited.

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