BOGOTA Sep 13, 2006 (Dow Jones Newswires)
The Colombian government Tuesday sent a bill to Congress asking for the approval of the sale of new shares of the state-owned oil company Ecopetrol SA equivalent to 20% of its capital, the Mines and Energy Minister Hernan Martinez said in a press conference.
The government plans to sell the shares on the local stock market, though if Colombian investors don't have enough cash to buy it all, the government may sell part of the stake on the New York Stock Exchange, Martinez added.
"We hope that, once the decree is approved, we will be able to sell the shares of Ecopetrol on the stock exchange between August and September of next year," Martinez said.
The government has said in July that it plans to sell new shares of Ecopetrol for an amount equivalent to 20% of the company's capital to raise funds for investment in new exploration and production projects.
Under Colombian privatization law, the government has to give a first option to company workers, cooperative associations, former workers and pension funds.
Opening up Ecopetrol to private shareholders will loosen some of the strict rules that apply to Ecopetrol. Currently, the company cannot raise debt, for instance.
"We are incorporating private capital into the company to give it financial muscle," the minister added.
Alejandro Martinez, the president of the National Association of Oil, an industry group, has said Ecopetrol may raise as much as $3 billion from the share sale.
"We hope that capital will be 100% Colombian," the minister added.
Colombia has seen production decline significantly in recent years. The country produced an average of 526,111 barrels last year, down from a peak of 815,000 b/d in 1999. If it doesn't find new reserves, it will become a net oil importer in 2012, according to government figures.
Ecopetrol's employees, infuriated by the share-sale plan, held a one-day strike in early August to oppose the sale and have threatened to carry out other walkouts.
The government gave the bill a "fast-track" status so that it will require only three debates in Congress instead of the normal four.
Copyright (c) 2006 Dow Jones & Company, Inc.
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