What the Colombian E&P industry should expect from next year’s elections
November 28, 2017
The Canadian Colombian Chamber of Commerce (CCCC) hosted the ‘Regulatory Perspectives for the Energy Mining Sector’ forum. HCC attended the event.
The Seguimiento y Estrategia (Monitoring and Strategy) consulting firm gave its perspectives on what the industry should expect next year, taking into account that it is an election year.
One of the main things that stand out from next year’s elections is that for the first time, 43 out of the 53 presidential candidates are ‘independent’, meaning that they either left one of Colombia’s traditional parties, or held a public position (like former Inspector General Alejandro Ordoñez) and are now aspiring to become president by gathering a bit more than 300,000 signatures.
Farc’s (Colombia’s ‘Revolutionary’ Armed Forces) presence in the upcoming elections can also be a game changer, and even though they do not have strength in big cities like Bogotá, Medellin or Cali, their ‘strength’ is in the regions. (HCC: This power might not necessarily be considered legitimate among inhabitants of Colombia’s rural areas, but it is something that could affect the industry.)
Popular consultations will still be on the radar next year and according to Cifras y Conceptos polling firm, the majority of Colombians in rural and urban areas are concerned about the development of industry activities in the country.
The alliance between Claudia Lopez (Green party), Sergio Fajardo (Compromiso Ciudadano movement) and Jorge Robledo (Polo Democrático) is one of the strongest among the presidential candidates, and here is where regulatory frameworks for the industry might take a twist.
Regulations for mining and energy projects have been at the top of Senator Claudia Lopez and Congresswoman Angélica Lozano’s agenda, and they have turned the issue into a political campaign.
Bill 086 of 2017 regarding Mining and Oil issues aims to make public hearings in the territories mandatory; in fact, they would be included in the Territorial Arrangement Planning (POT), meaning that if communities wanted to reject industry activities in the territories, they could do it through the POT.
Bill 087 of 2017 aims to grant new competences to local authorities in terms of monitoring environmental licenses, and reaffirms public hearings as mandatory, jeopardizing future projects in the regions.
The firm closed its presentation by saying that the post conflict process is an opportunity for companies to change the way Colombians perceive them, and that the government even opened an office to listen to entrepreneurs and their ideas to help during the process.
Bottom-line: Presidential elections are coming in 2018 and all political parties know that a great way to earn votes is to go after foreign investment a ‘common enemy’ that always seems to get attention in Colombia:.
It is funny how 'rejecting' the industry is a weapon to earn votes, but a tax reform caused by a lack of foreign investment could be the first reason why people would stop voting for a politician.
In fact, there is a clear dichotomy between left and right as we go into the elections.
The left has a more so-called ‘environmentalist’ viewpoint and so we can expect a lot of industry-bashing from candidates on that side of the political spectrum (the triple alliance mentioned above, Gustavo Petro, the Farc etc). Former Bogotá mayor Petro even believes that national oil company Ecopetrol (NYSE:EC) should be turned into the region’s leading solar-power generating company.
The right and center-right recognize the industry’s economic contributions but cannot entirely ignore the Colombian public’s rising environmental awareness. From this side, we can expect comments about environmentally-responsible oil and gas development. There will probably be some stern finger-wagging for the cameras, but maintaining and growing production and reserves will be the primary focus.
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