Despite some roadblocks in Colombia’s plan to sell a portion of state-controlled oil company Ecopetrol SA to help pay for recovery from torrential rains and floods, the country’s finance minister said Tuesday the sale remains on track to start before the end of this year.
The government controls 90% of Ecopetrol following a public offering for 10% of the company in 2007; it disclosed late last year that it would sell an additional 10% of Ecopetrol through a public share offering.
By selling part of Ecopetrol to help pay for the damage from the severe rains, the government said it would avoid an increase in deficit spending.
The plan, however, has run into some problems. The Constitutional Court struck down the government’s original plan to order the stake sale by decree, saying the administration was overstepping its authority. That forced the government to seek approval from the country’s Congress, which earlier this month sent the bill back to the government, citing procedural errors.
Finance Minister Juan Carlos Echeverry said Tuesday the proposal will be resubmitted to Congress soon and said the plan has the majority support of lawmakers. While the share issue could be for as much as 10% of Ecopetrol, Mr. Echeverry said the sale would likely take place in tranches as small as 1% at a time.
“The plan has to proceed through the legal steps and this will allow for the beginning of the sales toward the end of the year,” Mr. Echeverry said.
Amid the delays in selling a stake of Ecopetrol, the government on May 5 said it had to widen its 2010 consolidated fiscal deficit to 3.2% of gross domestic product from a previously stated 3.0%. The increase, it said, was needed for the ongoing costs related to the rains.
The downpours in Colombia over the past year, spurred by the La Nina weather pattern, have killed more than 400 people, left tens of thousands homeless and caused billions of dollars in damage as they destroyed neighborhoods, bridges, highways and agriculture.
Ecopetrol is Colombia’s largest oil and natural-gas company and the fourth-largest in Latin America. It produced an average of 686,000 barrels of oil equivalent per day last quarter. It also owns the country’s main refineries, including the Barrancabermeja plant that supplies 80% of the fuel used in Colombia.