The distribution of liquid fuels is a public service, and therefore, Law 26 of 1989 grants the Government the authority to determine schedules, prices, marketing margins, quality, calibrations, safety conditions, contractual relationships, and other conditions that influence the better provision of this service.
The price policy can be carried out under one of the following modalities:

1. Direct control regime: The Government sets the maximum price that producers and distributors can charge for fuels.
2. Regulated freedom regime: The Government establishes the criteria and methodology that producers and distributors must use to determine or modify the maximum prices of fuels.
3. Supervised freedom regime: Distributors may freely determine the prices of fuels, with the obligation to inform the Government about variations and determinations of their prices.

Law 1955 of 2019, as amended by Law 2294 of 2023, establish that the Ministry of Finance and Public Credit ("MFCP") and the Ministry of Mines and Energy ("MME") will establish the methodology for calculating the producer's income value for liquid fuels and biofuels, as well as the rates and margins associated with the remuneration of the entire chain of transportation, logistics, marketing, and distribution of such fuels that are part of the regulated market.

Subsequently, through Resolution 40193 of 2021, the MFCP and the MME delegated to the Energy and Gas Regulation Commission ("CREG"), among others functions, the following: (i) determining the price regime applicable to components of the price structure of liquid fuels and biofuels blended with such fuels. This applies except for the producer's income of regular motor gasoline, ACPM-diesel, and biofuels; and (ii) issuing economic regulation regarding the activities of refining, importing, storing, distributing, and transporting liquid hydrocarbon-derived fuels, except for setting prices for regular motor gasoline and ACPM.

In compliance with these delegated functions, on June 9, 2023, CREG published the following draft resolutions for comments:

1. Draft Resolution No. 704 001, which aims to establish (i) the list of departments and municipalities where the supervised freedom regime will apply; (ii) the maximum margin in force for retail distributors subject to the direct control regime in departments and municipalities outside the included in the list of item (i); iii) the annual performance of a competition analysis to monitor the dynamics of the retail distribution market; and iv) the obligation for all distributors to periodically report through the Liquid Fuels Information System ("SICOM") the values and variations in their margins, in accordance with the methodology determined by the MME.
   
   This project is open for comments from interested parties until September 18, 2023.


2. Draft Resolution No. 704 002, which aims to establish the methodology for determining the remuneration associated with the margin of the retail distributor for regular motor gasoline, ACPM-Diesel, and their blends with biofuels.
   
   This project is open for comments from interested parties until September 25, 2023.

Furthermore, in accordance with Decree 1260 of 2013, it is the responsibility of CREG to determine the methodology for remunerating assets that guarantee the strategic supply of fuels. Therefore, through Resolution 004 of 2021, as amended by Resolution 073 of 2021, CREG defined the procedure for calculating the discount rate applicable in the tariff methodologies it issues for fuels distribution.
 

According to the procedure defined in these resolutions, certain parameters obtained from information published by the firm Kroll (formerly Duff & Phelps), corresponding to the last available quarter on the calculation date, are used to calculate the discount rate. The information for each activity is published with a GICS (Global Industry Classification Standard) reference industrial code.

In this context, on June 9, 2023, CREG published for comments Draft Resolution No. 704 003, which aims to define (i) the reference GICS code to be used for calculating the discount rate applicable to wholesale and retail distribution of regular motor gasoline, ACPM-diesel, and their blends with biofuels; and (ii) the calculation date to be used for estimating each of the variables required in the discount rate calculation.

This project was open for comments from interested parties until August 25, 2023.

Finally, through Circular 065 of August 18, 2023, CREG invited public hearings for the socialization of the aforementioned draft resolutions (704 001, 704 002, and 704 003), which will take place as follows:
 

Interested parties wishing to attend the socialization sessions must register through the website: www.creg.gov.co in the events calendar section.