March 16 (Bloomberg) -- Bolivia's lower house of Congress, seeking to spur foreign investment in the country's oil and gas industry, approved legislation putting into law the taxes and royalties the government can levy on producers.

The bill, passed today by 58 votes to 47, would add a 32 percent tax to the existing 18 percent royalty on oil and gas output, Erica Brockman, Congresswoman for the Leftist Revolutionary Movement, said in a phone interview from La Paz. The law would create for the first time a dependable legal framework for foreign companies operating in Bolivia, she said.

``We're aware that we mustn't stretch things until they break,'' Brockman said. ``We don't want the oil companies to leave.''

President Carlos Mesa, who proposed the legislation, is pushing plans to tap Bolivia's 28.7 trillion cubic feet of natural gas, Latin America's second-largest reserves after Venezuela, to drive economic growth and create jobs. The Movement Toward Socialism, Bolivia's second-largest opposition party led by Congressman Evo Morales, voted against the bill, seeking a 50 percent royalty on oil and gas produced by foreign companies such as ExxonMobil and Spain's Repsol YFP.

The Senate will vote on the bill later this week, Brockman said. She said the lower house didn't include Mesa's proposal to deduct the new tax from other corporate taxes.

Opposition

Government officials said Mesa would veto the law if the Senate insisted on excluding the deduction clause, saying the law will create excessive costs for companies.

``We'll have to correct this law. It's a potpourri of political concessions that won't last 15 days,'' Hydrocarbon Minister Guillermo Torres told reporters in a broadcast on Bolivian radio Panamericana. ``We're going to have terrible problems.''

Brockman said Congress would vote tomorrow on Mesa's proposal to call general elections in August, two years ahead of schedule, in a bid to put at an end to weeks of road blockades that are costing Bolivia about $14 million a day in lost business.

Morales' followers lifted most roadblocks today while waiting for the senate vote.

``Our proposal has practically won,'' Evo Morales told reporters. ``With this bill we're near our proposal for 50 percent royalties.''

Business leaders such as Osvaldo Barriga, president of the Chamber of Exporters, rejected the call for early elections, according to a statement the website of daily newspaper La Razon attributed to him.

``I don't believe this is the best way out, because it leaves a great deal of problems unsolved,'' Barriga told reporters. ``The president's attitude creates conflict at all levels and creates uncertainty among international entities.''

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

Last Updated: March 16, 2005 16:39 EST