Liquid fuels sector projects investments in Colombia of $3.3 trillion in 2023

• In the short and medium term, it will be a priority to ensure the supply of fuels in all corners of the country and to plan a responsible energy transition.
• In 2022, the total demand for liquid fuels increased by 14%. For 2023, it is expected to increase by 2.5% and for the next decade to continue growing at this rate.
• In the distribution chain, the effort and work of 270,000 people ensure the supply and quality of fuels to all Colombians.

The Colombian Association of Oil and Gas (ACP) published the economic report ‘Liquid Fuels Market in Colombia in an Energy Transition Context’, a document that presents an analysis of the sector's evolution in 2022 and the outlook for 2023 – 2032, based on official statistical information and taking into account the results of a survey conducted by the association with a diverse and representative group of agents from the entire chain.

With the aim of improving the reliability and quality of fuel supply service to all Colombians, the agents of the liquid fuel distribution chain, committed to national and regional progress, have planned investments in the country of $3.3 trillion for 2023.

Of the total investments, $1.3 trillion will be allocated to major maintenance in refineries and the rest to expansions of the capacity of the pipeline system and wholesale supply plants; adjustments to comply with the new technical regulations; technological developments; environmental and social investment; and self-generation projects with renewable sources, research in hydrogen, and modernization of service stations towards multi-energy supply points.

According to the president of the ACP, Francisco José Lloreda Mera, “this investment demonstrates the effort of the chain agents to meet the mobility needs of Colombians across the country and, at the same time, the interest in advancing the energy transition.”.

To support these commitments to the country, as public policy priorities, the agents recommend increasing reliability in supply by developing strategic storage; continuing the gradual dismantling of fuel subsidies, mitigating the impacts on vulnerable populations; and thus promoting a gradual and responsible transition that guarantees energy security and optimizes efforts to reduce emissions in mobility.

Growing demand

In 2022, the total demand for liquid fuels grew 14%, reflecting the economic dynamics.

• The consumption of diesel and gasoline increased 12%, and the demand for regular gasoline compensated for the 29% drop in extra.
• The consumption of jet fuel increased 48%, surpassing pre-pandemic levels.

Between 2023 and 2032, total liquid fuel consumption is expected to continue growing annually at 2.51% (gasoline and diesel around 21% and jet at 41%), mainly driven by economic growth, although slowed down by the entry of electric and gas mobility.

The expectation is that, even with a greater penetration of electric mobility (121% of annual vehicle sales), the share of conventional gasoline and diesel vehicles will remain high in 2032, around 90%.

Increase in fiscal contributions and employment

It is estimated that during 2022, the collection by the central government and territorial entities from fuel taxes was 17.5 trillion (171% higher than the value estimated in 2021): 14 trillion from national taxes (VAT, national gasoline and ACPM tax, and carbon tax) and 3.5 trillion for departments and municipalities from the surcharge on gasoline and ACPM.

For 2023, considering the projected growth in demand and the update of tax rates, it is expected that the collection will reach levels close to 19 trillion.

In 2022, activities in the liquid fuel distribution chain generated around 150,000 direct jobs and 120,000 indirect jobs. It is expected to increase by 41% for 2023. “That is to say, behind the guarantee of fuel supply to Colombians, is the effort and work of 270,000 people,” highlighted the President of the ACP.

Cost of subsidies

In 2022, the total cost of the subsidy, granted through the Fuel Price Stabilization Fund (FEPC), for gasoline and diesel was close to 39 trillion. On average, the subsidy for gasoline was 7,530 per gallon and for diesel was 10,580 per gallon.

Liquid fuels and energy transition

To advance in a gradual and responsible energy transition in mobility, the agents of the chain recommended strengthening inter-institutional coordination and synergies among agents, continuing the blending program, and promoting the development of advanced biofuels, promoting modernization especially of the freight and passenger vehicle fleet, among others.

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