The distribution of liquid fuels generated $8.5 trillion in fiscal contributions to the country in 2023: ACP economic report
- For 2024, with the provision of this essential public service, the collection of $9 billion is expected.
- More than 245 blockades put supply at risk; therefore, to ensure continuity, it is recommended to develop strategic storage and strengthen enabling conditions for operation, among other actions.
- For 2024–2033, a growth of around 1.8% annually in the demand for liquid fuels is projected.
- Chain agents estimate to reach $3.3 billion in investment this year, in supply infrastructure and to contribute to the energy transition.
The Colombian Association of Oil and Gas (ACP) presented the economic report. ‘Liquid Fuels Sector in Colombia: Evolution 2023 and Perspectives 2024–2033’, which addresses the distribution of these energy sources as an essential public service; the contribution of liquid fuels to national energy security; the behavior of prices and the Fuel Price Stabilization Fund (FEPC); and the resilience of operations to overcome various contingencies and ensure the continuity of supply throughout the country, after analyzing official statistical information and the vision of a representative group of agents from the entire chain (refiner, transporter, biofuel producers, distributors affiliated with the ACP, and retail distributors).
“The distribution of liquid fuels is of great importance to guarantee fundamental rights of Colombians and significantly contributes to the socioeconomic dynamics of the country and regions, for example, through the generation of decent employment (more than 270,000 people work in the chain), investments to meet demand ($2.9 billion in 2023), and fiscal contributions (more than $8.5 billion in 2023; for 2024, the collection of $9 billion is expected), among other contributions,” expressed Frank Pearl, executive president of the ACP.
However, the report shows that during 2023, fuel distribution agents faced the challenge of overcoming various events that put the supply of approximately 45 million gallons at risk, 65% (around 30 million) due to blockades at plants and roads, mainly in Cundinamarca, Meta, Santander, Huila, and Cesar. Additionally, operational contingencies, landslides due to weather conditions, and limitations in the supply of ethanol during the first half. Nevertheless, thanks to the logistical effort of wholesale distributors and the leadership of the Ministry of Mines and Energy, supply was guaranteed in the national territory.
The President of the ACP recalled that ensuring a continuous and reliable supply of fuels is essential to maintain the stability of the energy system and that many critical services, such as public transport, emergency services, healthcare, and the supply of food and basic supplies, depend on constant access to fuels (according to the National Energy Plan, these represent 42% of Colombia's final energy consumption), so interruptions in supply could have serious consequences for the quality of life and put fundamental rights of Colombians at risk.
To continue efficiently meeting the demand for fuels from Colombians, chain agents recommend, among other actions: developing strategic backup storage; expanding pipeline transport infrastructure; facilitating imports of fuels and biofuels; stabilizing the ethanol blend percentage at 10%; defining the remuneration for additional requirements at the entry of the pipeline system; and strengthening, with government and regional authorities, the enabling conditions for operation.
Demand will continue to grow
In 2023, liquid fuel consumption in the country experienced moderate growth of 0.3%, in response to a reduction of 2.5% in gasoline consumption, while increases of 3% and 2% were observed in diesel and jet, respectively. This behavior was influenced by the 48% increase in the price of regular gasoline following the removal of the subsidy, the stability in diesel prices, the increase in land transport of cargo and passengers, the need to activate thermal generation plants, and the exit of low-cost airlines from the market. For 2024-2033, an annual growth of the fuel market of 1.8% is projected, anticipating a recovery in the path of sustainable economic growth starting in 2024, and greater adoption of low and zero-emission technologies.
Investments in supply and transition
It is expected that in 2024, chain agents will reach a total investment of $3.3 billion (12% higher than that recorded in 2023); which will be allocated to the expansion of pipelines, capacity expansions and adaptations in supply plants and service stations, digital transformations, research and development for sustainable fuel production, solar self-generation, charging points for electric vehicles, and natural gas and LPG service stations, and carbon-neutral certification processes.
Finally, the report recommends ensuring the essential public service of liquid fuel supply in a reliable, efficient, and sustainable manner, encouraging various supply sources to guarantee energy security, promoting competition through the release of margins, and incentivizing the increase of biofuel blending to achieve a just energy transition. In particular, the immediate opportunity to reduce CO2 emissions by increasing the ethanol blend in gasoline is highlighted, which does not require additional investments and can offer considerable benefits in terms of decarbonization.
Colombian Association of Oil and Gas