October 8th, 2020
reforma regalías

In recent days, the Congress approved and the National Government sanctioned Law 2056 of September 30, 2020, by means of which the organization and operation of the General System of Royalties is reformed and structured (the "Reform"). 

The Reform is part of the National Government's program for the economic reactivation and the generation of investment opportunities in equity and development projects. Therefore, the Reform undertakes, in general terms, the strengthening of the decentralization and autonomy of territorial entities, especially for the mining and O&G production regions. Likewise, greater efficiency in the investment of resources is expected, so that these can be translated into benefits for the country. 

Among the most important changes implemented by the Reform are: 

  • More royalties for the producing regions. Resources for social investment in regions that participate in the mining and oil sector will go from 11% to 25%. 
  • Municipalities with unsatisfied basic needs will receive 15% of the resources from royalties. 
  • 5% of the resources coming from royalties will be destined to projects related to the conservation of strategic environmental areas and to projects against deforestation. 
  • 5% of royalties will be destined to finance educational infrastructure projects or investment projects aimed at improving the expansion of coverage, permanence and quality of public high education. 
  • 10% of the royalties will be allocated to resources for projects to finance science, technology and innovation. 
  • 34% will be invested in projects with regional impact under population, poverty and unemployment criteria. 
  • A 7% will be allocated for the implementation of peace. 

The Reform is therefore important, considering that the resources from royalties have contributed 17% to the reduction of poverty in Colombia, thus betting on the hydrocarbon and mining sectors (which is where royalties are generated) would be indispensable for the fulfillment of the Government's objectives of social investment with equity. 

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