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News > Colombia

Colombia: Government Plans to Intervene in Pipeline Tariffs

  • The logo of Colombia's National Hydrocarbons Agency (ANH), is seen in Bogota, Colombia ON September 26, 2019

    The logo of Colombia's National Hydrocarbons Agency (ANH), is seen in Bogota, Colombia ON September 26, 2019 | Photo: REUTERS/Luis Jaime Acosta

Published 20 May 2020

This would affect the private companies, severely hit by the crisis derived from the COVID pandemic.

Private Colombian oil companies and the Government could be facing a conflict of interest, as the GovernmentGovernment may be about to intervene in the oil pipeline tariffs, according to a statement made by the president of the country's National Hydrocarbons Agency (ANH) on Wednesday.

Historic Collapse of US Oil Market as Price Goes Negative

ANH President Armando Zamora confirmed the rumors during a virtual event when said that "the Government, yes, it's considering an intervention in tariffs(...)This is very tricky (it) would be the first time that something like that happens."

The global crisis derived from the new coronavirus pandemic has dropped barrel's prices, something that has affected private oil companies in the nation severely.

"The price crisis and high uncertainty have led companies to reduce investments, closing wells and fields, with a serious impact on employment, the contracting of goods and services and in the economic dynamics of the producing regions," said the president of the private Colombian Petroleum Association (ACP) Francisco José Lloreda Mera in April.

"The national government is aware of this, important measures have been taken, but an urgent intervention in pipeline transportation rates, as they are excessively high compared to the cost of production, are not internationally competitive, and are the main obstacle to companies in this difficult situation," warned then.

Along these lines, ACP has protested in the past due to the tariffs on pipeline transport, which it considered excessive. These tariffs are controlled by a subsidiary of the state-run oil company, Ecopetrol ECO.CN.

In April, the ACP and Ecopetrol subsidiary Cenit didn't reach an agreement on pipeline costs financing is where the state enterprise offered a 50% cut in tariffs for May and June, giving the producers the option to pay the balance in September. At the time, ACP claimed that the arrangement would lead to higher costs later in the year, so the deal didn't succeed.

In the middle of all the stir caused by the immediate intervention, Zamora warned that, if it were carried out, some sectors would offer resistance and that "there will be repercussions (but) the government is preparing for litigation."

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