Colombia could potentially sell a stake in Ecopetrol beyond the 20% approved by Congress in 2006, Finance Minister Juan Carlos Echeverry said Friday.
In comments made to Caracol Radio, Echeverry said the 9.9% pending sale to complete the 20% privatization will finance investment projects, while a potential additional block could be used to pay for road projects.
Echeverry’s comments follow an announcement by President Juan Manuel Santos on Thursday that the sale of a 9.9% stake in Ecopetrol would be used to finance infrastructure development.
Santo’s announcement Thursday sent Ecopetrol’s shares tumbling and startled investors since the state oil company’s investment plan calls for the proceeds from the sale to be spent in projects to increase the company’s output.
Echeverry explained Friday that under the 2006 law that approved the sale of a 20% privatization of the firm the funds have to be used for Ecopetrol investment projects.
“It’s two different tranches,” Echeverry explained. The finance minister said that Santos had ordered Ecopetrol to examine the potential sale of an additional stake, but that “it’s not something imminent.”
The government currently holds an 89.9% stake in the firm, with the remaining trading in the Bogota bourse and in the U.S. through an American Depository Receipt.
“It’s not like we’re to come out and issue in the short-term,” he added. Ecopetrol’s shares could still get hit by the news.
The two tranches together could represent as much as $16 billion in new issues said Interbolsa SA, Colombia’s largest brokerage. “Expect the stock to get hit with the news,” Interbolsa said in a research note.