Brazil To Help Bolivia

Brazil To Help Bolivia With Import Switch; Loan
Possible

RIO DE JANEIRO -(Dow Jones)- The Brazilian government
is moving to help troubled neighbor Bolivia strengthen
its industry through an imports substitution program
and possibly more financial aid from Brazil’s
development bank BNDES.

A spokeswoman from Brazil’s presidency said Tuesday the
imports substitution program, which will be carried out
in association with Argentina, will benefit Bolivia’s
textile industry as well as home appliances and shoe
producers.

The presidency said details on the plan weren’t
available yet.

Additionally, Brazil’s BNDES will likely review a
previously announced financing line of $600 million for
infrastructure projects in Bolivia. "It could be
revised upwards, but there hasn’t been a decision on
that yet," the spokeswoman said.

Bolivia, for its part, is expected to agree to review
all commercial contracts it has with Brazil, including
a controversial natural gas purchase contract.

This is a main concern for the Brazilian government.
During the weekend, Mines and Energy Minister Dilma
Rousseff called Marco Aurelio Garcia, special
international affairs adviser to the presidency, to
voice her worries about the natural gas contract talks.
Garcia was in La Paz representing the Brazilian
government.

Rousseff and other government officials have been
trying to lower prices and volumes on natural gas
contracts between Brazil’s federally run Petroleo
Brasileiro , or Petrobras,and Bolivian state gas
supplier Yacimientos Petroliferos Fiscales Bolivianos.

But negotiations were suspended when the crisis started
in Bolivia.

Local demand for natural gas has been much lower than
expected owing to a currency crisis in 1999 and an
electricity crisis in 2001, leading Brazil to try to
revise the contract with Bolivia.

Apart from lower prices, Brazil also wants changes to a
"take or pay" clause in the bilateral contracts which
determine that Petrobras must pay for a certain volume
of natural gas even if it isn’t used.

When the 3,150-kilometer Bolivia-Brazil pipeline was
inaugurated in 1998, Petrobras signed an initial
contract committing to import 24 million cubic meters
of gas a day starting in 2004, since it believed
thermoelectricity would grow to supply a growing
economy. Petrobras controls the pipeline with a 51%
stake.

But market conditions are much worse than what the two
governments imagined 10 years ago when they started to
move on plans to build the international pipeline.

Despite the unrest of recent weeks in Bolivia, natural
gas supply to Brazil hasn’t been affected. Petrobras
currently imports about 13 million cubic meters of
Bolivian gas a day.

http://story.news.yahoo.com/news?tmpl=story&u=
/dowjones/20031021/bs_dowjones/200310211519001541