Bolivia looks to curb fuel smuggling with help of armed forces

LA PAZ (Reuters) - Bolivia's government has called on the armed forces to tighten border controls to curb the smuggling of state-subsidized fuels, a move it believes will save state coffers some $250 million per year.

Keeping fuel prices steady, currently 3.74 bolivianos ($0.5452) per liter for gasoline and 3.72 bolivianos per liter for diesel, cost Bolivia $1.7 billion last year alone, according to data from state oil firm YPFB.

The proliferation of subsidized fuel on the black market and its use in illegal mining and drug trafficking, "is bleeding Bolivia's economy," the nation's hydrocarbons minister Franklin Molina said at a news conference on Thursday. "We all pay for the subsidy," he said.

The government is calling on the armed forces, police, customs and YPFB personnel to beef up oversight, a move aimed at averting fuel shortages in the upcoming farming season in Santa Cruz region, the Andean nation's largest food producer.

Bolivia is committed to protecting its subsidy-reliant, big-state economic model despite deficit risks and is planning an "aggressive" push into gas exploration, the economy minister told Reuters in late December.

The landlocked nation is a key gas producer and subsidizes the sector to rein in fuel prices as well as the production of goods and services. This has helped control inflation.

($1 = 6.8600 bolivianos)

(Reporting by Daniel Ramos; Writing by Anthony Esposito; Editing by Bill Berkrot)