By Francesco Zaratti:

La Paz, November 10, 2026 – Although Bolivia’s sugar industry has been around for 80 years, it was not until September 15, 2018, that Law 1098 was enacted, authorizing the blending of increasing proportions of anhydrous ethanol with base gasoline to produce a higher-octane fuel.

This could have been done through a Supreme Decree, but who wants bread when they can offer you cake? In fact, the baker (better known as the “gas admiral”) took less than a month to be rewarded by the international sugar industry association, receiving the Ethanol Man of the Year award at the Master Cana Awards for this modest achievement.

The aforementioned law contains several controversial provisions:

• It does not contribute to the Specific Consumption Tax (ICE) or the Extraordinary Tax on Hydrocarbons and Derivatives (IEHD); it contributes only to VAT.
• It obligates YPFB to purchase the domestically produced product and blend it in increasing proportions (from 10% to 25%) with low-octane base gasoline. The currently authorized blend is 12%.

However, anhydrous ethanol is not 100% domestically produced: its production requires imported diesel, machinery, and technology, as the recently enacted Supreme Decree 5763 has been forced to acknowledge. For this reason, the decree adjusted the price of a liter of ethanol to Bs 8, pending the elimination of the gasoline subsidy scheduled for January 2027. It is worth noting that the cost of anhydrous alcohol for YPFB (Bs 8.00/liter) is higher than the retail price of gasoline (Bs 6.96/liter). No further comment is necessary.

The arguments in favor of immediately increasing the blend to 15%, and subsequently to 18% in April 2027, are well known: saving foreign currency by reducing gasoline import volumes, using a plant-based and therefore “renewable” fuel, creating jobs in the country, among other benefits.

So far, no reasonable person could oppose such a laudable objective. Nevertheless, there is sufficient evidence of the risks to engines that increasing the blend beyond the authorized 12% would entail.

On the one hand, the sugar mills and the Government rely on a study conducted by UMSA (Universidad Mayor de San Andrés), whose tests reportedly found no engine damage with blends of up to 25%. It would be interesting—and more scientific—if the study specified the blend percentage at which malfunction or engine damage first begins to occur, unless conventional gasoline-powered vehicles (as opposed to flex-fuel vehicles) can actually run on 100% ethanol.

UMSA researchers consulted on this matter warn that these tests, beyond their academic value, could serve as a shield for the authorities (the ANH and the Ministry of Energy) should mechanical failures occur, potentially jeopardizing UMSA’s reputation and exposing the university to legal liability.

This concern, which is known to UMSA authorities, arises when we compare that study with a report by the U.S. Environmental Protection Agency (EPA), which has temporarily authorized blends containing up to 15% ethanol, while excluding cars manufactured before 2001, passenger transportation vehicles, and motorcycles of any model year. In Bolivia, this represents more than 30% of the gasoline-powered vehicle fleet.

The risk, therefore, is real and could lead to a problem even worse than that of “garbage gasoline,” particularly given the poor handling of the product and inadequate controls over its water content.

Ultimately, these doubts would disappear if consumers were free to choose between different types of gasoline (with or without ethanol), as recommended by each vehicle manufacturer. In keeping with the business sector’s liberal ideology, such an option should encounter no opposition. On the contrary, one would expect to see gas stations offering different ethanol blends suitable for all types of engines, including flex-fuel vehicles.

Best wishes and good health,

Francesco