Radio New Zealand - Te Reo Irirangi o Aotearoa

Bolivia fuel prices skyrocket by 70%

Updated at 5:00 pm on 27 December 2010

The Bolivian government has announced a sharp rise in the price of fuel, with petrol and diesel going up by more than 70%.

Vice-President Alvaro Garcia Linera says the state cannot go on subsidising prices when so much fuel is being smuggled abroad by profiteers, though it will compensate for the rise by raising public sector wages and freezing utility bills.

"We are bringing fuels up to international price levels," Mr Garcia says. "State subsidies cost $380 million ($NZ500 million) a year; we don't want this to continue. We buy expensive diesel fuel and sell it cheap."

Low-octane petrol prices go up by 73% and diesel by 83%.

Mr Garcia says the move is aimed at stimulating energy companies to produce more oil and to import diesel and gasoline.

Drivers' union calls strike

Fuel prices in the impoverished South American country have been frozen for almost a decade, so the price rise has stirred anger, the BBC reports.

The Drivers' Confederation, which groups bus and lorry operators, called an indefinite strike starting on Monday.

The sudden embracing of free-market principles will be a tough test of support for left-wing president Evo Morales, correspondents say.

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