Billionaire losses and cost overruns would leave Gustavo Petro’s anti-oil proposal

The Colombian Petroleum Association (ACP) revealed a report that shows the panorama that the country and Colombians would have to face if on August 7 a president arrives at the Casa de Nariño whose plans include ending the petroleum sector. hydrocarbons, as Gustavo Petro, candidate of the Historical Pact, has mentioned on several occasions.

“Colombia has oil and gas, and the logical thing is for the country to do everything in its power to continue being self-sufficient in terms of hydrocarbons. The great lesson of the war in Ukraine and of the new energy reality is that if a country has to be self-sufficient, it has to be self-sufficient and not depend on others”, assured the president of the ACP, Francisco José Lloreda.

Stopping hydrocarbon activity in Colombia would lead to a 47% drop in oil production, and in gas it would be 27% in the next five years. Therefore, Colombia would have to resort to imports and gas imports would have to be made from 2026which would represent expenses of USD 6,000 million and more cost overruns due to possible international crises, as is currently the case with Russia’s invasion of Ukraine, which has led to the international price of gas reaching record highs.

Likewise, importing gas means that industry, transport and the 11 million Colombian families that use natural gas in their households would have to pay a price five times higher. In addition, energy rates could be affected because approximately 20% of energy is generated with natural gas.

As for oil, the ACP assured that the drop in exports would be seen from next year and, from 2028, Colombia would be forced to import it to meet national needs. This would mean losses of USD 4,500 million in exports and assume expenses for USD 1,700 million in oil imports to produce gasoline, diesel, jet (jet fuel), petrochemicals and other derivative products. Therefore, the price paid per gallon of gasoline and diesel would also increase.

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If gas is imported, 11 million Colombian families would have to pay a price five times higher. – Photo: Getty Images

Less money for the Nation and the regions

The drop in oil production would lead the country to lose about $18 billion in tax contributions between 2022 and 2026. Of this total, $13 billion would not be received by the Nation and the remaining $5 billion by the regions for less royalty payments by companies that produce hydrocarbons in the territories.

The union explained that the $13 billion less that the Nation would receive is equivalent to defunding 40% of the solidarity programs that benefit four million Colombians with limited resources, putting at risk some 40,000 public jobs and defunding 65% of the investment destined for education for 2022.

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The drop in oil production would lead the country to lose some $18 billion in fiscal contributions between 2022 and 2026. – Photo: Getty Images/iStockphoto

On the other hand, the loss of $5 billion in royalties between 2022-2026 would affect all departments departments receive. A non-oil department, like Chocó, would stop receiving some $70,000 million, while a producing department, like Meta, would stop receiving some $378,000 million in direct royalties and $34,000 million in indirect royalties.

Likewise, the fact that the departments stop receiving resources from royalties means that they will not have resources to finance projects for basic sanitation, housing, roads and infrastructure for education.

Investments would also be hit

A policy to sustain the exploration and production of hydrocarbons will encourage $84 billion in investments in the sector during the next government, but if a policy to weaken the sector is implemented investments would be reduced by $21 billion between 2022 and 2026. In other words, only $63 billion would be received.

According to the ACP, this fall would have a negative effect on the departments in which some hydrocarbon activity is carried out, since there would be less hiring of goods and services and local labor.

“This is a crucial moment for the country, after the pandemic and the resurgence of poverty that it caused, there are many challenges in social matters, and this sector can be a great ally in the fight against poverty, since the resources that generated would support the financing of the main development programs of the next government, and would allow leveraging energy and productive diversification, while we take advantage of the oil and gas resources that Colombia has in this unique window of opportunity for the country,” said Francisco José cry.

Colombia
The article is in Spanish

Tags: Billionaire losses cost overruns leave Gustavo Petros antioil proposal

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