Colombia must ensure sufficient proven oil reserves to undertake a safe energy transition: Carlos Hernán Rodríguez.
On his first visit to the Hidroituango power plant, the Comptroller General of the Republic, Carlos Hernán Rodríguez Becerra, drew attention to the prudence and technical rigor with which the analyzes of the measures taken in the energy and mining sector must be assumed. Additionally, it recommended that the intervention to the Public Services Regulation Commissions be carried out in a technical way, looking at the real needs of the users and respecting the laws of the free market.
Rodríguez Becerra recognized that Hidroituango is a strategic asset to guarantee the present and future energy supply of the country and for this reason it is essential to maintain special monitoring and accompaniment that the CGR has been carrying out since March 2022, to ensure the adequate investment of the resources recovered with the fiscal responsibility ruling for $4.33 trillion and to help minimize risks (environmental, social, sectoral, technical and financial) associated with this project.
“Today in this great project, vital for the present and future energy, I take this opportunity to warn that Colombia must ensure sufficient proven oil reserves to undertake a safe energy transition,” emphasized the head of control.
Likewise, he considered it urgent to take into account the forecast by the institutions to facilitate the entry of new energy supply, both for generation and for energy transmission assets, in the face of a prolonged El Niño phenomenon expected for the fourth quarter of 2023.
“Today there is an urgent need to expedite the construction of the Colectora-Cuestecitas and Copey-Cuestecitas lines, in La Guajira and El Cesar; assets that would allow the entry of 9 wind and solar projects, which provide 1,577 megawatts (MW) of electricity supply and thereby improve energy security ”, he highlighted. In this sense, he called for these projects to be expedited, in order not to put the country’s energy security at risk.
Intervention of Regulation Commissions
For the general comptroller, measures such as the announced intervention to the Regulation Commissions must be adjusted to principles or criteria of Economic Efficiency, Neutrality, Solidarity, Redistribution, Financial Sufficiency, Simplicity and Transparency, defined by the Public Services Law.
“Although the president can directly assume the functions of the Energy Regulation Commissions (CREG) and the Water Regulation Commission (CRA), it should be noted that these are mainly made up of government officials. However, it is recommended that the intervention be carried out technically and look at the real needs of the users; in any case, respecting the free market laws in the terms of article 333 of the Political Constitution and the regulation of monopolies”, noted the head of the control body.
“I take advantage of this visit to ask EPM, which is a public company and one of the main players in the sector, if it can give the country guarantees that it will not abuse its dominant position, both in generation and in commercialization, and that it will not Thus, the intervention proposed by the Government is justified,” he added.
Prudence and technical rigor in the debate on energy transition
The comptroller recalled that in Colombia and the world the energy transition is an ongoing public policy, which is why it is necessary to permanently monitor its results in reducing greenhouse gases and the impact on all economic sectors, but also on state finances.
He then mentioned several figures that account for the importance of the mining-energy sector:
This sector represented 56.1% of exports in 2022 and contributed $33 billion in royalties to the regions in the last two years; resources that were used to provide drinking water, health, education and sewerage.
In addition, it generates around 90,000 jobs per year, demands local goods and services in the order of $11 billion per year and allocates $453,000 million to social investment, contributing to improving people’s quality of life. For its part, Ecopetrol contributes close to 4% of the income of the National Government and by 2023 it is estimated that this company will deliver close to $52 billion in royalties, taxes and dividends.
“It is clear that Colombia still has a great dependency on the resources generated in the mining-energy sector, for which reason the Comptroller General of the Republic calls attention to the prudence and technical rigor with which the debate and the analysis of the measures that are taken on this important sector of the economy”, he stressed.
According to the Comptroller, “For the use of cleaner energy, Colombia must make its transit gradually and safely, with clear and firm objectives, defining viable medium and long-term strategies, not only due to the demands and commitments at the global level in environmental matters, but also due to the depletion of our internal production”.
Hydrocarbon reserves must be sufficient to cover the energy transition process
Rodríguez Becerra pointed out that year after year the country adds approximately the same amount of oil reserves as it is producing annually, with a net effect of constantly having the same reserves/production ratio, which on average has been 6.4 years. for the last 10 years.
“Adding the so-called probable and possible reserves, whose probabilities are 50% and 10%, would be inaccurate since these determine scenarios whose materialization depends on continuing investments in exploration and exploitation,” he immediately warned.
In his concept, hydrocarbon reserves must be sufficient to cover the energy transition process, in such a way that the reliability of the energy supply, energy sovereignty and the country’s economy in general are not jeopardized.
“On the other hand, it must be taken into account that resources such as LPG and natural gas (with sufficient reserves for 8 years), are energy sources that can serve as a bridge for the energy transition; by substituting more polluting sources. Liquefied petroleum gas -LPG-, for example, avoids burning wood and because it is easy to transport to rural and remote areas of the national territory, it benefits health and the environment,” he also said.
And he considered that mining activity may also have space in the transition with minerals such as lithium, graphite and cobalt, which will increase their demand by close to 500% by 2050, and others such as copper and aluminum, which will present an increase in their demand of approximately 35% at 2040. “Colombia should take advantage of the mining potential in the extraction of minerals such as copper and nickel and encourage the exploration of strategic minerals,” he stressed.
Finally, the Comptroller General of the Republic referred to the winter emergency and the energy shortage suffered by the departments of Nariño and Cauca and said that the Comptroller’s Office values the efforts made by the Government and will follow up on this contingency, given that to the extent that the solutions take longer, the additional expenses can become considerable and also increase the discontent of the communities.
CGR forum on energy transition, in March
Within the framework of the commemoration of the 100 creation of the Comptroller General of the Republic, next March there will be a forum on the energy transition that Colombia needs, a plural and academic space for the improvement of public policies that the country.