The biannual budget for royalties presented by the National Government, the highest one in recent years, has been approved. These $24.2 trillion will boost regional development

The biannual budget for royalties presented by the National Government, the highest one in recent years, has been approved. These $24.2 trillion will boost regional development

  • The 2019-2020 biannual budget for royalties will grow by 67% with respect to the 2017-2018 period. In total, regions will be able to count on $30 trillion pesos, if we add the unapplied $6 trillion from previous allocations.
  • With two trillion pesos for the biannual period, President Ivan Duque, the Congress of the Republic and the Governors have honored their commitment of adding resources to the educational sector, especially for public higher education as well as for science, technological and innovation on a national scale.
  • All of the regions shall receive more resources from royalties with respect to the previous biannual period, thus providing equity and development nationwide.
  • 80% of the resources from the General System of Royalties come from contributions made by the hydrocarbons sector and the remaining 20% correspond to mining activities within Colombia.
  • With ‘Public Works for Royalties', companies will be able to formulate and implement investment projects as part of royalty payments. This will be a voluntary mechanism between territorial entities and producing companies.

Ministry of Mines and Energy. Bogota D.C. December 5th, 2018. The Congress of the Republic has approved the 2019-2020 Biannual Budget for Royalties worth $24.2 trillion pesos on Wednesday, which is the highest figure recorded since the creation of the General System of Royalties back in the year 2012. Regions will be able to count on a total of $30 trillion pesos, if we consider the $6 trillion from previous allocations that have not been applied thus far.

The budget for the next two years, which was presented by the Ministry of Finance and Public Credit as well as by the Ministry of Mines and Energy, will grow by 67%, going from $14.5 to $24.2 trillion pesos compared to the 2017-2018 period. The approved sum is equivalent to over half of the yearly budget for the educational sector and is twice the cost of the Bogota metro.  

Through the General System of Royalties, it will be possible to provide additional resources of up to $2 trillion for the educational sector, as follows; $1 trillion in order to finance physical infrastructure works involving Public Institutions for Higher Education (IES), just as President Ivan Duque had proposed; $250 billion for institutional strengthening and the research capacity of public IES, according to territorial needs and regional productive bets; $250 billion for  top level training at Colombian universities with doctorate programs by employing Bicentennial doctoral excellence scholarships; and $500 billion for basic education. Allocations of the Fund for Science, Technology and Innovation will go from $1.1 trillion to $2.1 trillion pesos. Peace-related resources will go from $511 billion pesos to $1.9 trillion pesos, that is, almost four times as much as the value for the previous two year period.   

"This budget is full of good news for the country, thanks to the rise of international oil prices. A significant part of these resources will be allocated for the financing of investments projects that will contribute to the implementation of the Peace Agreement," said the Minister of Finance, Alberto Carrasquilla Barrera.

With respect to the previous two year period, all of the country's regions will receive additional resources from royalties, thus boosting equity and development. If investment-related resources are specifically considered, they will be the highest recorded over the past 8 years, by going from $12.6 to $18.4 trillion pesos, a figure corresponding to a 46% increase.  

"These resources exist thanks to the undertaking of oil, mining and gas projects that are producing great benefits for the country and its regions. There are resources for municipalities, departments, education, science, technology, innovation, peace and savings. The challenge is that, within two years, resources from royalties will lead to public works, not to investigations," said the Minister of Mines and Energy, Maria Fernanda Suarez.

The administration of President Duque has also complied with the commitment to improving the income of producing regions, which shall receive 60% more royalties than during the previous period, going from $7.9 to $12.7 trillion pesos.   

"For the purpose of preserving the source of these resources, it is essential to continue placing our bets on the mining and energy sector as well as increasing the current oil and gas reserves, which correspond go 5.7 years and 11.7 years, respectively. Self-sufficiency in hydrocarbons will enable us to keep contributing resources and guarantee national energy security," Minister Maria Fernanda Suarez added.

Public Works for Royalties, a voluntary mechanism for the implementation of regional public works  

In order to bring dynamism and agility to resource investment within the territories, companies undertaking exploration and extraction activities shall be able to formulate and implement investment projects, as part of the corresponding royalty payment. This will be a voluntary mechanism between territorial entities and producing companies.  

These projects must be approved by the Collective Body for Administration and Decision (OCAD) and they must prioritize the development of infrastructure related to public services, secondary and tertiary roads, as well as concerning agricultural and productive projects within the regions. Resources assigned to these public works will be managed by a commercial trust, which shall be responsible for carrying out processes that will apply the principles of public contracting, such as objective selection, a plurality of offers and the freedom of participation in order to guarantee investment transparency.

Since the year 2012, more than $30 trillion pesos from the General System of Royalties have been approved for investments in over 13,000 projects. Education and transportation are the sectors that have benefitted the most. According to information from the National Planning Department, resources from royalties explain almost 20% of the poverty reduction seen over the last few years in Colombia.

2019-2020 Biannual Budget for Royalties, distributed per region

Compared to the prior period, all regions nationwide shall receive greater resources from royalties in 2019-2020.

Region 2017 - 2018 Biannual Period 2019 - 2020 Biannual Period Increase
Caribe $4,3 trillion $6,6 trillion 55%
Pacífico $1,9 trillion $3,0 trillion 55%
Llano $2,2 trillion $3,3 trillion 53%
Eje Cafetero $1,3 trillion $2,0 trillion 53%
Centro-Oriente $2,0 trillion $3,1 trillion 55%
Centro - Sur $1,4 trillion $2,3 trillion 60%


Wednesday, December 5, 2018, Cundinamarca, Bogotá D.C., Source: MinMinas
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