Article 35 of Law 1955 of 2019 establishes that the Ministry of Finance and Public Credit ("Ministry of Finance") and the Ministry of Mines and Energy ("Ministry of Mines") shall establish the methodology for calculating the price of liquid fuels and biofuels, as well as the rates and margins associated with the remuneration of the entire supply chain, including transportation, logistics, marketing, and distribution of such fuels that are part of the regulated market.

Additionally, the aforementioned article provides that the Ministry of Finance can determine the mechanism for stabilizing the prices of regulated fuels to the consumers, to mitigate, in the national market, the impact of fluctuations in fuel prices in international markets.

Furthermore, Article 244 of the National Development Plan 2022 - 2026 amended Article 35 of Law 1955 of 2019, adding that the Ministry of Finance and Ministry of Mines can establish differential stabilization mechanisms for the components of the reference prices for the sale of regulated fuels considering principles of efficiency and progressiveness.

In furtherance of the above, the Ministry of Mines published a draft decree by which the fossil fuel producer price for regular motor gasoline and ACPM-Diesel for large consumers (agents that consume an average of more than 20,000 gallons of fuel per month for their exclusive use in their activities) shall be at least the international parity price. This means that fuels purchased by large consumers will not be stabilized or subsidized and must be paid at the international price.

According to the technical concept related in the draft decree, and in accordance with the principles of efficiency and progressiveness, it is necessary to establish a differential mechanism for large consumers and use the resources intended for stabilizing the price of the fuels they acquire in investment or social public expenditure.

In any case, large consumers corresponding to electric power generating companies located in Non-Interconnected Zones (ZNI) are exempted from this differential mechanism, because an increase in the cost of diesel needed for providing the public service of electricity would result in an overall increase in the cost of this service and therefore, have a negative impact on the living conditions of the vulnerable population residing in these areas of the country.

Finally, it is proposed to add to the functions of the Ministry of Mines stipulated in Article 2.2.1.1.2.2.1.3 of Decree 1073 of 2015, the control and surveillance of differential mechanisms for stabilizing the prices of liquid fuels and biofuels.

To review the draft decree, please access the following link: Draft decree