The National Government issued Decree 1297 of 2019 by means of which it ordered the publication of the draft Constitutional Amendment of article 361 of the Political Constitution regarding the Royalties System.


The draft Constitutional Amendment of the Royalty System moves forward

The National Government issued Decree 1297 of 2019 by means of which it ordered the publication of the draft Constitutional Amendment of article 361 of the Political Constitution regarding the Royalties System (the “Draft”).

Currently, royalties are distributed in equal parts among all departments and municipalities of the country and are destined to various funds with the purpose of promoting science, technology and innovation, public savings, among others. 

With the amendment proposed by the Draft, the distribution of royalties will change dramatically as indicated below: 

  • 34% for regional investment projects of regional governments, prioritized on the base of criteria of unsatisfied basic needs, population and unemployment. 
  • 20% for departments and municipalities in which exploitation of non-renewable natural resources is carried out, as well as municipalities with ports used for transporting such resources or their by-products. In addition, municipalities where non-renewable natural resources are produced will be entitled to an additional 5% participation on royalties. 
  • 15% for municipalities with the lowest income in the country, prioritized based on criteria of unsatisfied basic needs. 
  • 10% for investments on science, technology and innovation. 
  • 3% for the performance, operation and administration of the Royalty System, for the oversight of exploration and exploitation of deposits, the study and drafting of geological cartography of the subsoil, the evaluation and follow-up on the environmental licensing of exploration and production projects involving non-renewable natural resources, among others. 
  • 1% for the conservation of strategic ecosystems, national parks and water sources, as well as the national fight against deforestation. 
  • The remaining 17% will be destined to savings for pension liabilities and for the stabilization of the investment. 

In addition, transitional paragraph 2 of the Draft sets forth that the National Government will have a maximum term of six months, counted as from the enactment of the Constitutional Amendment, to file before Congress a bill that adjusts the General Royalty System to the new text of article 361. 

After this first round of debates before Congress, the Project will have to undergo a second round of four debates in which it will have to be approved by absolute majority in both, the Senate and the Chamber. This second round of debates must conclude before December 16, 2019, date in which the ordinary period of sessions of Congress ends. 
 

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