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Colombia

( Last update: June 2006 )

Electricity Market
Sector structure
Upstream The sector is partially privatised and highly reliant on hydro-schemes (approx. the 76% of installed capacity in 2005), which are mainly state-owned. The remaining of production come from thermal plants (mostly coal and natural gas) and other renewables schemes.

About three dozen of companies (both private and publicly owned) are active in the generation sector EMGESA is the dominant player controlling about the 20%. Other important players are EEPM, ISAGEN, and EPSA. EMGESA.

A wholesale electricity market where long-term transaction take place has been established since 1995 and is run by the Centro Nacional de Despacho CND, a division of the 59%- state owned Interconexión Eléctrica S.A. (ISA). An electricity pool for non-compulsory spot trades supports the wholesale.

A 25% of market share quota on total installed capacity is imposed to electricity power producers since 2002.

Operational separation is required between generation and distribution activities and 25% capital stocks quota on the same distribution company is imposed to electricity producers. Mere accounting unbundling is required for vertically integrated incumbents established before the 1995.
Networks Transmission and distribution sectors are partially privatised.

Transmission system comprises the network serving the Atlantic coast and the network serving the central regions connected by numerous interconnecters.

ISA owns and control the largest part of the system accounting for the 70%. The rest of the grid is owned and operated by 11 smaller transmission companies with EPSA, Distasa S.A. y CHB as private players. A RTPA regime has been adopted since 1995.

Several DSOs operate the distribution grids. The largest electricity distributing company in Colombia is CODENSA, servicing over one million customers in Bogota and surrounding areas.

Two interconnecters permit trading with Ecuador and other initiative assure negotiations with Venezuela.

Distribution and transmission tariffs are regulated by the Commission for the Regulation of Energy and Gas (so called “Comisión de Regulación de Energía y Gas - CREG”).

Ownership separation for transmission and other electricity activities. Mere accounting unbundling is required for vertically integrate incumbents established since 1995. A 25%-participation limit on the same producer company is imposed to distributors since the 1º of January 2002.
Downstream The sector is partially privatised.

Largest distribution company is CODENSA serving Bogota and surrounding areas.

Eligibility level sets at 0,1 MW/m.

Non-eligible consumers tariffs are regulated by the CREG while eligible consumers tariffs are market based.

A quota of 25% of market share over supply activities to end-users has been introduced since 1° January of 2002.
Gas Market
Sector structure
Upstream The sector is partially privatised.

Several proven natural gas reserves (about 4.0 trillion cubic feet (Tcf) in 2006) but only few are active (about 7) located mainly in Llanos and Guajira fields producing the majority of current production.

The dominant player is Chevron Texaco (.which has produced an average of 465 Mmcf per day (Mmcf/d) in 2005). Another important player is the state-owned (ECOPETROL).

Wholesale prices are market based, with the exception of natural gas produced from Guajira (Ballenas), Opón and Cusiana fields.

A capital stock limits on the same transport (25%) or distribution (20%) company is imposed to producers.
Networks Transport and distribution activities are partially privatised.

The gas transport system composed by three main lines is operated by the state-owned Empresa Colombiana de Gas (ECOGÁS), under a RTPA regime. Other private firms own and operate other small stretches: the main player is Promigas S.A., that operates the Atlantic Coast pipelines.

20 (both exclusive and no-excusive) licensee DSOs operate the distribution pipelines.

Operational separation is required for natural gas transmission and other activities. Mere accounting unbundling for incumbent firms operating transport pipelines before the coming into force of Law 142 (1994).

A 25% reciprocal participation limit to the capital between transport and other natural gas activities is still in place.

A 30%-capital stock quota on generation activities is imposed to distributors since 1995, and a horizontal limit (30% of market share) to distributors will come into force in 2015.

Transmission and distribution tariffs are regulated by the CREG.
Downstream The sector is partially privatised.

Retailing activities can be carried out with distribution.

An antitrust limit (25% of market share) on retailing to end-users has been established since 1998. No limit is imposed for supply to electricity generation consumers.

Non-eligible customers tariffs are regulated by the CREG.
Current issues On going privatisation process of generation companies.

Expanding hight-voltage transmission capacity (connecting Bogota to Atlantic cost).

Protecting gas and electricity systems from saboteurs to guarantee the reliability of supply.

Completing new Hidro-power generation projects (Pescadero-Ituado plant, completion panned in coming years and Porce III plant, completion planned in 2009) and diversify the electricity supply to increase security and reliability (coal or natural gas-fired plants).

On going transmission system expansion planned by ISA.

Stimulate the power sector integration process between Colombia and neighbouring countries members of the Andean Community. Colombia is also looking towards Central America as a potential source of electricity trading.

Government continues the Natural Gas Mass Consumption Plan aimed to increase domestic consumption and to promote Colombia as the Andean region’s «hub».

Many gas production initiatives are underway (i.e. Cuisian/Cupiagua complex will operated by the licencee BP; Tayrona-off shore Caribbean block exploration project planned by an international consortium of Petrobras, ExonMobile and Ecopetrol).

In June 2004, BP was awarded a natural gas production license for the Cuisiana/Cupiagua complex, which the company hopes will compensate for the reduction in oil production at the site. To better utilize the natural gas resources at the field, BP plans to begin construction by 2008 on a gas-to-liquids (GTL) plant at the field. The plant will have an initial capacity to produce 84,000 bbl/d of high-quality diesel fuel.

Building the natural gas export/import pipeline between Colombia (Guajira) and Venezuela (Maracaibo region).

On going expansion process of natural gas domestic consumption. The government sets out a Natural Gas Mass Consumption Plan aims to increase domestic natural gas use and establish Colombia as the “gas hub” for the Andean region.
National Legislation Natural gas and electricity legislation available on CREG website
Sources IERN staff on publicly available information.