On October 11, Congressmen Inti Asprilla and Juan Diego Muñoz, members of the Green Alliance Party, submitted Bill 219 of 2022 to the General Secretariat of the Congress of the Republic. This bill aims to make the Colombian State the sole entity authorized to directly explore and exploit hydrocarbon deposits. Furthermore, the legislative initiative stipulates that, if approved, all existing modern concession contracts (E&P and TEA contracts) would be rendered null and void.

Thus, the bill seeks to completely overhaul the current contracting model, which empowers both domestic and foreign companies to carry out exploration and exploitation activities through a concession scheme in which the State never relinquishes ownership of the natural resources. The proposed bill would place these powers exclusively under the control of the national government, arguing that this would allow it to capture all the profits currently received by multinational corporations, and only then could funds be allocated to social investment in the regions. However, the legislators conveniently omit the fact that this change would also require the national government to assume the economic risks inherent in this market—risks that are currently borne entirely by the private sector.

In this same vein, it is worth reminding the proponents of this proposal that the national government already receives economic benefits from hydrocarbon exploitation and that it is inaccurate to claim that private companies monopolize the sector’s profits. This is because the exploitation of these resources generates royalties for the state, which must be directed toward projects for the social, economic, and environmental development of all municipalities in the country. And this sum is by no means negligible. For the 2021-2022 biennium, the nation benefited from 17.3 trillion pesos in royalties by allowing companies to exploit non-renewable natural resources at their own risk. And it is on this point that the discussion should focus: the proposed law intends that, in the future, the State, using public funds, will fully assume the risks associated with investments in exploration and exploitation activities. Investments that do not always result in profits.

With the current contracting system, the State receives economic benefits without jeopardizing the General Budget of the Nation, since it is important to clarify that not all fields where reserves are projected contain deposits that are actually technically and commercially viable. Under the scheme proposed by the congressmen, these risks would be assumed by all citizens through taxes. A small detail they have neglected to mention.

On the other hand, let’s remember that the Ministry of Mines and Energy’s stance has been decisive in not granting any more exploration licenses. However, this bill does allow for such activity, but only by the State. It’s worth noting, then, that legislators who supported Minister Irene Vélez’s measure and then went on to defend the bill would be demonstrating a clear contradiction in their arguments, not to mention hypocrisy. This would reveal that the reasons for not granting more licenses were never about protecting the environment, because if that were the case, they wouldn’t support the State being the only entity authorized to profit in this market.

Finally, and no less importantly, the representatives of the Green Alliance Party also intend to render all contracts under the current scheme, signed before the bill comes into effect, absolutely null and void if it is approved. Faced with this scenario, the Colombian state must prepare for the numerous lawsuits that investors will file for breach of contract, given the terms on which they entrusted their capital. Congressmen Asprilla and Muñoz must consider that opening the door to legal instability in the energy sector would ultimately undermine the country’s fiscal security. Hence the concern of experts and citizens regarding this ill-advised initiative.