Colombia Congress Committees OK Ecopetrol's Partial Sale
BOGOTA, Nov 22, 2006 (Dow Jones Newswires)
The Energy Committees of Colombian Congress' two houses Tuesday approved the sale of a 20% stake in the Colombian state-oil company Ecopetrol SA.
The legislators approved the sale of shares of Ecopetrol on the stock exchange to individual and private companies, but established that the government will keep at least 80% of Ecopetrol. The text approved by the committees will go for approval first in the Senate and then in the lower house.
"I'm satisfied, the vote opens the path for Ecopetrol to start an aggressive investment plan to avoid the risk of an end of oil self-sufficiency," Mauricio Salgar, Ecopetrol's top official, told reporters after the Congress vote.
The Colombian government announced the plan to sell a 20% stake in Ecopetrol on the stock market to get funds for seeking new oil reserves as the current ones are dwindling. The country's Mines and Energy Minister expects to carry out the sale in the third quarter of 2007.
Colombian government's top energy officials have said they wanted to repeat the partial sale of the transmission grid Interconexion Electrica SA (ISA.BO). Since 2000, the government gradually floated 28.2% of the company. ISA in the past six years expanded into several countries in the region and the company's share price gained almost 500% since the first sale.
"Ecopetrol will have a life of its own and will be able to explore for and extract oil with funds from the private sectors," said Julio Manzur, a senator from the Conservative party. "We hope the results will be positive to stop the country to lose its oil self-sufficiency."
Oil is Colombia's largest export, but the country's reserves are dwindling, and production fell to an average of 538,198 b/d from about 815,000 b/d in 1999. According to government estimates, if no new reserves are found, the country will become a net oil importer in 2012.
The text approved by the Congress committees on Tuesday sets rules to the partial privatization.
First, individuals won't be authorized to buy more than the equivalent of 5,000 legal monthly minimum wages, or about 2 billion Colombian pesos ($904,000).
Then, private companies won't buy more than 3% of the Ecopetrol shares set on sale and pension funds won't be able to buy more than 15%.
Thirdly, buyers won't have the right to sell their shares during the first two years.
The government will give priority to the so-called social groups, which include labor unions, the company's workers, cooperative associations and privately owned pension funds, and any Colombian citizen.
The government will first hold two rounds of sale exclusively for social groups and then, if it doesn't find buyers for all the shares, it will open a third round to any private company or individual.
Hernan Martinez, the country's Mines and Energy Minister, said he was confident a third round won't be necessary.
Despite the limitations, there is a strong interest for Ecopetrol among institutional investors.
"With a stock exchange with so little diversity, it would good to have an oil company," said Juan Camilo Guzman, who helps manage a $1.5 billion with Colombian pension fund Skandia. He said he'd like to buy Ecopetrol shares, "depending on the price."
"If Ecopetrol finds oil, it will become a huge business," Guzman said.
The Congress Committees established that the government will have to hire two separate investment banks with experience in energy deals.
Copyright (c) 2006 Dow Jones & Company, Inc.
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