Through the Ministry of Finance and Public Credit, the Government and Ecopetrol defined a scheme to cover the balance registered by the Fuel Price Stabilization Fund (Fepc) as of March 2022, equivalent to about $14.1 billion.
Thanks to this fund, the Colombian State has continued to subsidize part of gasoline prices at the local leveland through this mechanism it has been prevented that the increase in the international prices of oil and fuels is transferred to the pockets of Colombians, as an additional pressure on prices to the escalation of inflation in recent months.
As reported by the portfolio and the state oil company, the plan agreed upon by the two parties involves two main actions to settle said balance in the coming weeks.
The first of these consists of contributions from the Nation for nearly $8 trillion, corresponding to $7.3 trillion of cash resources and $675,400 million of dividends already decreed on the 2021 results of Ecopetrol that correspond to the Government, according to the considerations approved in the Ordinary Assembly that was held on March 30 of this year.
A second point is the proposal to release part of the occasional reserve that was set up at said Meeting, and that would be distributed as an extraordinary dividend to the shareholders. A) Yes, $168 per share would be distributed as an extraordinary dividend, equivalent to about $6.9 billion in total.
According to the statement sent by both parties, the proposal will be presented at Ecopetrol’s Extraordinary Shareholders’ Meeting, requested by the majority shareholder (MinHacienda) and which is scheduled for June 17.
On April 20, the Ministers of the Treasury, José Manuel Restrepo, and of Mines and Energy, Diego Mesa Puyo, presented a commitment from the national government to solve the accumulation of deficits in the short and long term.
“Our commitment is to pay the deficit that has been accumulating and present substantive solutions that allow closing the differentials in the future” Restrepo indicated at the time.
The head of the Treasury portfolio had already anticipated that, for this, the Government was reviewing “all the mechanisms at our disposal, including the possible surpluses from the budget and debt service, surplus dividends from the Ecopetrol group for the year 2021 and appropriations from the 2023 General Budget of the Nation.”
It is worth mentioning that the international price of a barrel has contributed to Ecopetrol currently presenting a solid situation in its internal accounts, and during the first quarter of this year it reported profits of $6.6 billion, the highest recorded in its history for that period.
According to information released by the oil company and the ministry, With this agreed scheme, it is also expected to strengthen the liquidity of the Ecopetrol Groupas well as its ability to execute the investment plan announced for this year and the coming years, as well as the projected strategy for 2040.
“The mechanism not only allows it to provide a solution for the liquidation of the balances due as of March 2022 in the Fepc, but also contemplates a strategy for the adequate financing of the fund during the coming years”They indicated in the joint statement.
On the other hand, the Ministry of Finance also ratified “its commitment to fulfilling the Fepc’s obligations and to the proper functioning of the fund in the medium term.”
The ministry clarified that therefore, in the presentation of this year’s Medium-Term Fiscal Framework, which is scheduled for mid-June, a roadmap will be presented that will include a multi-year payment scheme (2022-2025) of the obligations estimated to contract with the fund.
Thus, according to the ministry, compliance with the fiscal rule is expected to continue.
In addition, the Ministry has also been working on “a range of alternatives” to structurally reform the stabilization mechanism, in order to guarantee its sustainability in the medium term.
A POSITIVE MEASURE
According to Julio César Vera, an expert in the hydrocarbon sector, this “it’s good news”and so the government honors, as it has done historically, “the payment of the subsidies that it has granted to fuels, given that it ratifies the reliability and legal certainty in the regulations issued on the Fepc since 2007.”
Additionally, according to Vera, this allows Ecopetrol “to have the necessary cash to fulfill your business plan and not have to resort to other sources of financing”.
According to the expert, it is also necessary to look at how to address the current reduction in the differential between the domestic price and the international price.