Tax Reform would jeopardize the viability of exploration and production projects and private investment in the sector: ACP

In relation to the Tax Reform proposal presented by the National Government for discussion in the Congress of the Republic, the Colombian Association of Oil and Gas, ACP, wishes to communicate to the public:

1. The Association shares the National Government's objective of reducing poverty and inequality and contributing to climate change management and sustainable development, within the framework of a comprehensive transition: energy, economic, and productive. In this sense, it highlights the Ministry of Finance's commitment to the Fiscal Rule and, therefore, to continue with fiscal adjustment while seeking investment resources.
2. The ACP agrees then with the need for a tax reform that contributes to the collection of new fiscal resources, especially if these are directed towards ambitious reforestation programs and hunger reduction and peacebuilding through agricultural and livestock projects in the regions where the industry operates, also contributing to the economic diversification of those territories.
3. The hydrocarbons sector has been and is one of the great contributors to the country; a decisive source of foreign exchange and public income at the national and regional level, leveraging strategic initiatives for economic, social, and environmental development. In this framework, the Association considers it essential that the reform under study does not affect the viability of the industry, both public and private, of investment, and of competitiveness.
4. There is concern about the impact of the reform, given that the tax burden on the sector could reach up to 80 percent, which would compromise the viability of Exploration and Production (E&P) projects, including existing contracts that require investment, without prejudice to what is necessary for a comprehensive transition; it is worth noting that private companies are responsible for 70 percent of the exploration carried out.
5. A decrease in investment and the cancellation of E&P projects would jeopardize not only the competitiveness of fundamental projects for energy self-sufficiency and having reasonable prices for households, particularly in gas and electricity, but would also impact development, employment, and the procurement of goods and services in 19 departments, going against the spirit of the reform.
6. We reiterate our willingness to continue the dialogue with the National Government, led by the Minister of Finance, with the Congress of the Republic, led by its President, and with the Minister of Mines and Energy, in order to share the sector's analyses and the impact of the proposed reform, so that they contribute to building an initiative that ensures the competitiveness and viability of the industry.