Energy subsidy deficit

Energy    Sep 1, 2021 4:49 PM

Associations of the gas and electricity sector showed their concern for the deficit in energy subsidies for 2022.

They said that the resources allocated for subsidies are insufficient in electricity and natural gas to meet the needs of 2021 by up to CoP$2T, La Republica reported.

The country needs CoP$2.9T for electricity and CoP$775B for natural gas to cover the totality of the payments to offset tariffs, according to the associations.

Asocodis’s José Camilo Manzur warned that the underfunded budget in subsidies could represent in 2022, a tariff increase of up to 60% for stratum 1 and 40% for stratum 2.

Naturgas’s Andrés Sarmiento said that the gas sector will have a deficit of CoP$442B with the resources allocated.

“This means that with today’s budget, there are not enough resources to cover all the needs. To cover the 2021 deficit, plus the estimated 2022 deficit, CoP$1.2T would need to be appropriated in the budget,” Sarmiento said.

The government estimates an amount of CoP$528B for natural gas, so producers and marketers would have to assume CoP$670B that would not be covered.

Andeg’s Alejandro Castañeda said that the problem in the subsidy differential is getting bigger and bigger, which causes companies to neglect issues such as the investment required for their networks.

The companies requested the entire subsidy deficit as of August 31st this year, which would amount to CoP$739B for energy and CoP$262B for natural gas.

Bottom-Line: The government wants to expand energy and natural gas service in the country, but the subsidy deficit continues to increase preventing companies from focusing on new projects due to the lack of liquidity.

The outlook is not encouraging as authorities have remained silent on this issue, but companies continue to show their concern about this growing problem.

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