Transfer of assets between public entities

Regulation & Policy    Aug 10, 2021 4:27 PM

The Ministry of Energy (MinEnergia) and the Ministry of Finance (MinHacienda) signed an inter-administrative agreement for the transfer of shares in seven companies in the electricity sector free of charge in December 2020 as a strategy to generate more income.

MinEnergia transferred to MinHacienda its ownership in seven electricity sector companies with government participation, La Republica reported.

These shares, which in total have an intrinsic value of CoP$1.0T, and if disposed of, would possibly be used to reduce the fiscal gap.

Representatives of the MinHacienda explained that the purpose of the operation is to effectively direct the companies towards the generation of economic and social value through a gradual centralization process, in line with the recommendations of the Conpes 3851 document.

“The change of ownership does not modify the management that has been taking place in the companies, considering not only the importance of these assets for the regions in which they operate but for the Colombian electricity sector in general,” MinHacienda highlighted.

The entity is evaluating the asset management strategy, without making a sale decision yet.

Maritza Martinez, first Vice-president of the Senate, said that doubts arise regarding the operation due to the possible privatization of companies such as Electrificadora del Meta (Emsa), whose transferred shares (106,465) are equivalent to CoP$148.7B.

Martinez considers that the government is contemplating the sale of these assets, since authorities signed a consultancy contract with the purpose of analyzing, designing, elaborating and, if appropriate, implementing the plan or program for the sale of the Nation’s shareholding in the companies of the energy sector.

Some of companies transferred include Electrificadora del Huila (CoP$325.2B), Empresa Urrá (CoP$270.1B), Electrificadora del Meta (CoP$148.7B) and Centrales Eléctricas del Cauca (CoP$127.7B).

MinHacienda was configured as owner of 99.99% of the companies Distribuidora del Pacífico and Empresa Urrá; the participation is 72.3% in Electrificadora del Caquetá.

Bottom-Line: After the failed tax reform, the government has no other options but to sell public assets, and these companies will generate a quick relief to the deteriorated public finances.

However, this will not be an easy process as local authorities will begin to exert pressure to prevent the sale of these companies. The government will have a difficult task to avoid new social protests.

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