Biannual royalties have increased by 60% in the budget presented by the National Government

Biannual royalties have increased by 60% in the budget presented by the National Government

Ministry of Mines and Energy. Bogota D.C. October 01st, 2018. Royalties within the budget for the 2019 to 2010 biannual period will increase by over 60%, compared to 2017-2018. This was announced by the Minister of Mines and Energy, Maria Fernanda Suarez, during the joint presentation of the Biannual budget for royalties together with the Minister of Finance, Alberto Carrasquilla.

The head of the mines and energy cabinet position explained that "the budget will go from $11.7 trillion pesos in royalties to $19.2 trillion. This amount represents almost half of the annual budget for national education, almost three times the amount for social inclusion or five times the housing budget. With these resources, the mining and energy sector shall boost regional development and transform industry contributions into public works and benefits in order to improve the quality of life of Colombians."

Regarding the $19.2 trillion pesos for royalties within the budget, the extraction of hydrocarbons contributes over $15 trillion –as $13.4 trillion pesos correspond to crude oil production and $1.7 billion to gas production– and mining activities provide 3.2 trillion, primarily due to the extraction of coal and nickel, among other minerals.

One of the largest increases will be the allocation for peace-related purposes, which will go from $511 billion pesos to almost $1.7 trillion pesos. This increase shall enable the provision of larger and better opportunities for the peace-related stabilization areas through road construction, expansion of electricity coverage, drinking water and basic sanitation as well as education. At the same time, the allocations from the Fund for Science, Technology and Innovation will go from $1.1 trillion pesos to $1.7 trillion pesos.

More initiatives for regional producers

During the legislative process of this project, the National Government shall work together with Congress in order to establish mechanisms for speeding up and bringing dynamism to the investment of resources from royalties. A mechanisms known as "Public Works for Royalties" will be proposed, which can be used by companies undertaking exploration and extraction operations in order to formulate and present projects to be financed with royalty resources, as well as for the application of the projects approved by the Collective Body for Management and Decisions (OCAD). These initiatives must be consisted with the National Development Plan and the plans for region-based entities.

Likewise, efforts will be made concerning special measures for increasing the allocation of royalties to municipal producers. In the same manner, other initiatives will be proposed in order to bring institutional strength to the Environmental sector and for the creation of "Bicentennial Scholarships" through the Fund for Science, Technology and Innovation. 

Additional royalties

In addition to the increase for the biannual budget of royalties, Minister Maria Fernanda Suarez has ratified that in January 2019 there will be an addition to the current budget, thanks to rising oil prices.

It is worth mentioning that, according to DNP estimates, the royalty system explains 17% of the poverty reduction experienced in Colombia between 2012 and 2015.

Monday, October 1, 2018, Cundinamarca, Bogotá D.C., Source: MinMinas
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