April 17th, 2020
mining and energy sector

The National Government, considering the economic, social and environmental emergency caused by COVID-19, has issued Decree 574 of 2020, aiming to conjure the effects of the emergency over the mining sector and to adopt measures that seek to guarantee the continuity of the power energy and gas public service provision.

The National Government has identified the need to temporarily relief and suspend the compliance of certain legal and contractual obligation of some mining titles.

Likewise, the National Government identifies the need for public utilities companies with public majority participation to count with tools to provide continuity to the provision of home public services to its users.

Besides, it has identified the need to take other types of measures aiming to guarantee the continuity and effective provision of public utilities in the country in the middle of the crisis.

Consequently, in the mining sector, the National Government suspended the payment of the surface rent (canon superficiario) (article 230 Law 685 of 2011) to be paid within 15 business days following the termination of the mandatory preemptive isolation measure. This measure only applies to those that do not present delays in the payment of the rent, and will not generate default interests, however the value must be indexed with the Consumer Price Index (IPC).

Also, the Ministry of Mines and Energy will adopt a methodology to distribute and assign the resources coming from unidentified origin mining commercialization royalties. This distribution will be done mainly to the producer municipalities with registered subsisting miners. Said resources may be destinated to investment projects with the purpose of implementing actions for the attention and aid of this people.

In the energy sector, firstly, the National Government established the possibility to use the uncompromised resources of the Normalization Program for Electric Networks in the performance of new projects or under performance project of the Financing Support Fund for Rural Interconnected Zones Energization and/or Financing Support Fund for Non-Interconnected Zones Energization.

Secondly, the Company Fund of the Public Utilities Superintendence may grant credits to public utilities companies with public majority participation to ensure the continuity in the provision of public utilities during the emergency.

Public utilities companies may grant as guarantees the subsidies caused or to be received for the provision of the service (article 6 of Decree 517 of 2020). Likewise, decentralized companies of national and territorial order may grant financing to these public utilities companies with public majority participation.

Thirdly, the Nation, Mayors and Governors, or other national o territorial decentralized companies are authorized to capitalize the public utilities companies with public majority participation. Likewise, the Nation may make as capital contribution the share participation it has in companies of the electric sector without the need for budgetary operations. Also, the Nation may assign to its decentralizes entities, at any title, the electric assets of the Nation, in order to guarantee the provision of the power energy service in Non-Interconnected Zones.

Fourthly, territorial entities who directly provide the water and sewerage service may use the resources from the participation of water and sewerage in the Participations General System (Sistema General de Participaciones) to pay for the credits and obligations they have with power energy and fuel gas public utilities companies; following the rules set forth in the decree under study.

Fifthly, during the emergency, the companies that hold Nation’s or territorial entities’ assets in Non-Interconnected Zones, that are operating them without any formal deliver act, may continuously provide the power energy public service.

Sixthly, the delivery of energy solution implementations of the Financing Support Fund for Non-Interconnected Zones Energization (article 288 of Law 1955 of 2019) that were due before or during the economic, social and environmental emergency, were suspended until December 31st 2020.

Likewise, powers have been grated to the Ministry of Mines and Energy, prior concept by the Mining and Energetic Planning Unity, (Unidad de Planeación Minero Energética – UPME, for its Spanish acronym) and the Energy and Gas Regulatory Commission (CREG), may declare the energentic state of emergency, whenever there are situations that represent a serious threat to the continuity of the power energy, fuel gas and liquid fuel distribution public service.

The Ministry of Mines and Energy may define prioritization, attention and/or rationing of the demand of liquid fuel, bio fuel or its mixtures, to guarantee the provision of the public service and the attention of the population’s basic needs, whenever there are unsavable restrictions tot the demand of liquid fuels that prevent the continuous provision of the service.

Lastly, a temporary support to minor distributors has been declared, by modifying article 8 of Law 26 of 1989 and establishing a retain of 0.5% of the utility margin of minor distributors of liquid fuels derived from petroleum for each gasoline or diesel gallon. Also, the possibility for subsidies to users of Liquid Petroleum Gas public services by the Ministry of Mines and Energy to be directly delivered to its beneficiaries has be established.


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