According to preliminary estimates by the Ministry of Commerce, Industry and Tourism, foreign direct investment for 2013 is expected is to be approximately $15.5 million. This figure, which exceeds the figure for 2012, is predicted to be principally focused on the oil and mining sector - and there is no indication that the wind will change any time soon. Thus, there are great opportunities in terms of mergers and acquisitions.
Several significant players in Colombia's energy sector have applied for approval from the Superintendence of Industry and Commerce (SIC) for key mergers or acquisitions. The SIC has been approving, objecting and conditioning mergers and acquisitions since 2001 in order to avoid concentrations of economic power in the market.
Mining has become a major source of growth for Colombia's economy during the last decade, and was recently designated as an engine for economic development by the government. In 2012 mining accounted for more than 23% of the country's total exports. However, many fear that 2012 marked a turning point in the mining sector's upward dynamic. But all is not lost - there is some positive news.
In less than a decade Colombia has moved from being a country in an energy crisis to a regional power provider. The electricity sector owes its current strength to the fact that it is regulated by the independent Colombian Energy and Gas Regulatory Commission, which applies strict technical and financial criteria to ensure the smooth running of the sector and its expansion.
The Ministry of Transport has paid Drummond – a multinational company exploiting coal on the north coast – nearly Ps60 billion (more than $30 million) for breach of contract, in compliance with a decision of the Court of Arbitration of the Paris Chamber of Commerce. The Civil Cassation Chamber of the Supreme Court had to decide whether the Paris court's award was in line with Colombian domestic law.
The Colombian government has just requested the Constitutional Court to extend for an additional two years the deadline by which a new Mining Code must be presented to Congress, as the necessary consultation with ethnic communities has proved difficult and the process has been delayed.
Oil companies operating in Colombia have stated that production will continue to be adversely affected by the slow pace of environmental permit processing in the country. While in 2009 it took just five to six months to obtain environmental approval for such projects, by 2011 this had increased to 371 days on average. The delays have paralysed production in important oil and gas areas of the country.
The Colombian energy sector welcomed in 2013 with news of privatisations. The Ministry of Economy announced plans to privatise several electricity assets – mainly generation and distribution companies – to raise Ps3 billion. In the mining sector, the National Mining Agency has re-negotiated the extension of the mining concession contract for the Cerro Matoso project, the largest nickel-producing facility in Colombia.
According to the Mining Information Service, production of coal in Colombia in 2012 reached an output of between 90 and 91 million tons. This amount is lower than the 2012 goal set by the Ministry of Mines and Energy, which initially had calculated a production threshold of 97 million tons. However, coal exportation in 2012 – 85.8 million tons – was greater than the amount exported in 2011.
The government has presented to Congress a draft bill that will tackle illegal mining through several amendments to the Criminal Code and environmental regulation. Illegal mining has become a new source of finance for terrorist groups and criminal gangs. Therefore, the bill increases the penalties imposed when resources deriving from illegal mining are used in money-laundering activities.
In light of recent delays in the development of important infrastructure projects, electricity industry players have requested more coordination between public authorities and a new regulation to resolve the different issues that slow down the development of electricity generation and transmission projects.
President Juan Manuel Santos has announced a new legal reform which will designate illegal mining as a criminal offence that will incur criminal punishments. At present, illegal mining is not defined as a criminal offence in the Criminal Code and has criminal consequences only if it is associated with serious environmental damage.
Including: Oil and gas; Minerals and mining.
The district council is discussing a draft accord establishing a number of tax incentives for parties which modify their traditional energy-generation sources by converting to alternative renewable and clean energies. The accord creates a new category of land that would be subject to reduced tax rates: real estate where rational and efficient energy promotion, organisation and development programmes are implemented.
The government is in the process of awarding a number of conventional and unconventional oil fields through a bidding process. The National Hydrocarbons Agency is planning to assign 18 areas exclusively for unconventional hydrocarbons. The Ministry of Mines and Energy recently issued Resolution 180742, which defines the procedure for the exploration and production of unconventional hydrocarbons.
A draft bill recently presented to Congress aims to introduce a new tax in the oil and gas industry. Traditionally, the industry was exempt from tax as such activities were not on the list of activities to which industry and commerce tax applies. The taxable basis for calculating industry and commerce tax will correspond to the petroleum production or extraction value at the well head, measured on a per-barrel basis.
Through its National Plan for Mining Development 2019 the Ministry of Mines and Energy introduced a number of rules to improve mining standards in Colombia. The plan highlights the main areas to be developed. Five years after the plan's publication, the government has taken certain measures in order to facilitate its implementation.
The National Hydrocarbons Agency's Accord 4 of May 2012 amended the award of contracts for oil and gas areas in Colombia. Chapter 3 of the accord refers to awarding procedures. There are two types of procedure: competitive bidding and direct award.
Chapter 3 of the recent accord on the award of oil and gas contracts deals with the award of areas. In addition to the existing exploration and production and technical evaluation agreement contracts, the accord introduces a new type of contract, known as special contracts. The contract minutes are proposed by the president of the National Hydrocarbons Agency and adopted by its board.
Accord 4 of May 4 2012, issued by the National Hydrocarbons Agency (ANH), amended the award of contracts for oil and gas areas in Colombia. Under the accord the ANH must prepare and regularly update the Land Map, which is intended to show the current status of the Colombian oil and gas areas by classifying them into certain categories.