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  HOME | Bolivia

Bolivia Says Scandal Will Not Halt Construction of Gas Plant

LA PAZ -- The Bolivian government has provided assurances that a natural gas-separation plant to be built in an eastern province will go through as planned despite bribery concerns surrounding the project.

The president of Bolivian state energy firm YPFB, Carlos Villegas, said Thursday that the "government has decided to guarantee the construction" of the plant in the town of Rio Grande, in Santa Cruz province, and that the project will not be interrupted for any reason.

Villegas said Bolivia needs the plant - which will separate out liquid components from the natural gas exported to Brazil - because it will provide the country will additional volumes of liquefied petroleum gas and gasoline.

Construction of the plant became overshadowed by a corruption scandal after the murder of businessman Jorge O'Connor D'Arlach, an executive with the Bolivian-Argentine firm Catler Uniservice that had been awarded a contract to build the plant.

O'Connor was carrying $450,000 in cash when he was killed by robbers outside the home of former YPFB President Santos Ramirez's in-laws.

The opposition has speculated that that money was a bribe to be paid to Ramirez as a reward for Catler Uniservice having been awarded the $86 million contract - signed in 2008 - for the gas-separation facility.

Villegas, for his part, said there are still many aspects of the contract that must be clarified, adding that he will have more information once a commission sent to the United States to investigate the work of subcontractors from that country hired by Catler reports back.

In a related matter, ousted YPFB chief Ramirez was jailed Friday at the San Pedro Penitentiary, in downtown La Paz, for his presumed role in the bribery scandal.

A court in La Paz on Thursday ordered Ramirez to be jailed after determining that he was a flight risk and could also obstruct the investigation being carried out into the alleged corruption.

A former Senate president and one of the architects of President Evo Morales' 2006 gas industry "nationalization" program, which mandated that YPFB must have a majority stake in all of the country's natural gas projects, Ramirez denies any wrongdoing and this week began divorce proceedings against his wife.

The socialist president says he supports efforts by prosecutors and a Senate commission to get to the bottom of the YPFB scandal.

On Saturday, during a ceremony to enact Bolivia's new constitution, Morales, who has made the fight against the corruption one of the top priorities of his administration, said no one found guilty of corruption will enjoy impunity, regardless of whether they belong to the governing MAS party or, as in Ramirez's case, are personal friends of the president.


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