The Ministry of Mines and Energy ("MME") has issued Resolution 40121 of 2024 (the “Resolution”), that applies the methodology for the distribution of the available resources for the incentive to the non-renewable natural resources ("NRNR") production.
The seventh transitory paragraph of Article 361 of the Political Constitution of Colombia established this incentive. Said article establishes that 30% of the income from financial returns generated by the General Royalties System ("SGR") will be allocated to the production incentive in municipalities where NRNR are exploited and in those with ports through which these NRNR and their derivatives are transported.
Law 2279 of 2022, allocated the budget of the SGR for the period between January 1, 2023, and December 31, 2024. The financial returns allocated to the incentive to produce NRNR corresponded to COP$ 395,680,537,553.
From these resources, through Resolution 40320 of April 12, 2023, COP$ 158,272,215,021 were distributed, leaving a balance equivalent to 60% of the resources allocated for the incentive to be distributed.
Therefore, through the Resolution, the MME distributed the remaining resources allocated for the incentive to produce NRNR, corresponding to COP$237,408,322,532.
For the distribution and allocation of resources, the Resolution establishes criteria such as participation in the budget, institutional strengthening, areas affected by armed conflict, unmet basic needs, and performance in resource approval.
To incentivize production in municipalities where crude oil, coal, gas, precious metals, and nickel are exploited, the Resolution allocates 90% of the available remaining resources to municipalities where NRNR are extracted and 10% to municipalities with ports through which these NRNR or their derivatives are exported.
Article 7 of the Resolution contains the formula applied to determine the value of the production incentive corresponding to each beneficiary municipality, considering the amount of resources to be distributed, the number of beneficiary municipalities or districts, and the projected income from direct allocations, among other variables.
The royalties management of the MME will inform each territorial entity benefiting from the production incentive the amount of allocated resources. The distribution of these resources per beneficiary will be recorded in the budget and royalty disbursement system. Additionally, a notification will be sent to the National Planning Department, which will inform the Ministry of Finance and Public Credit to make the corresponding payment.
The Resolution also specifies that the procedure to access the resources is included in Article 2 of Resolution 40043 of 2021 as amended.
Furthermore, if a benefiting territorial entity has resources not allocated to any investment project by December 31, 2025, the MME may redistribute such resources through an administrative act.
Finally, Annexes 1 and 2 of the Resolution contain the allocated resources for each of the beneficiary municipalities and districts.
For further information on the Resolution, please refer to the following link.