Aurora Barroso de Charry of Parra, Rodríguez & Cavelier gives an overview of recent legislation related to both the structure and duties of Ecopetrol.
Recently, through Decree 1163 of June 29, 1999, changes were introduced to the Colombian state owned oil company known as Empresa Colombiana de Petróleos - ECOPETROL. The main changes are:
- Ecopetrol’s role as a State industrial and commercial enterprise is redefined, and it shall now function almost as a private company.
- The Ministry of Mines and Energy shall regulate the distribution of oil income, including administration of oil contracts and royalties.
- Ecopetrol’s accounting system shall be modified.
- The cost of hydrocarbons extracted by Ecopetrol, directly or through association with third parties, shall be included in company financials as a State contribution to the company’s equity each quarter.
- The National Royalty Commission shall form part of the National Planning Department, as a Special Administrative Unit, which purpose is to supervise and control the correct use of funds obtained from royalties.
- The technical committee is eliminated as well as the position of oil supervisor (superintendent).
- The company must begin executing contracts with authorized pension funds within the next six months for the administration of reserves to cover insufficiently funded pension liabilities, currently worth 4.2 billion Colombian pesos. The company will have to make yearly contributions to the pension fund and the current target is to fund 70% of liabilities by the year 2007.
The Ministry of Mines and Energy shall be in charge of estimating the value of the previously mentioned "State contribution to Ecopetrol". The company shall submit to the Ministry financial statements corresponding to the preceding quarter during the first twenty days of each quarter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information, please contact us.