CO-F-006 V.2

Jaime Alberto Guerra Páez

Training course on Biogas technology for developing countries in 2015

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Content

1. Colombia Overview

2. Competencies natural gas industry

3. Institutional framework

4. Sector Structure

5. Service Coverage

6. Natural Gas Industry Overview

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ABOUT COLOMBIA

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•This country is the result of the union of cultures at the time of the conquest, so the traditions in the regions are represented in the many dialects, dances, colors, sounds and tastes.

•Colombia is the second country with the richest biodiversity in the world. Colombia as a tropical country and given its geography and position in South America, has many ecosystems that make varied to be located on the Caribbean and Pacific oceans and three mountain chains.

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GEOGRAPHY:

Colombia is in the latitude and longitude of 04 ° 00 N, 72 ° 00 w. It is located in the northwest corner of South America. Colombia covers both the northern and southern hemispheres.The capital city of Colombia is Bogotá. The latitude and longitude of Bogota, Colombia's capital city is 04º 38 'N, 74 ° 05' w.

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Colombia's surface is of 2,129,748 km², of which 1,141,748 sq km correspond to its mainland and the remaining 988,000 square kilometers to its maritime extension

Bordered on the east by Venezuela and Brazil, to the south with Peru and Ecuador and northwest by Panama; in terms of maritime boundaries, borders Panama, Costa Rica, Nicaragua, Honduras, Jamaica, Haiti, Dominican Republic and Venezuela in the Caribbean, and Panama, Costa Rica and Ecuador in the Pacific Ocean.

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• DEMOGRAPHICS: Population of 48,321,405 people.

• Ethnic diversity in Colombia is the result of the mix of indigenous Amerindians, Spanish colonists and African slaves, giving rise to a population of mestizos, whites, mulattoes and blacks, as well as the mixture of black and Amerindian, or zambos. The proportions of the different ethnic groups vary markedly by region.

• The difficult economic situation, mainly, make Colombia is one of Latin American countries with the largest flow of migrants.

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• ECONOMY:

• The official currency of Colombia is the Peso, which is divided into 100 cents.

• Colombia ranks as the fourth largest economy in Latin America after Brazil, Mexico and Argentina in the international classification, it is within the 28 largest in the world.

• It is part of the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa), that comprise emerging economies with high growth potential.

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FAUNA AND FLORA

Among the wildlife are the largest mammals of South America such as the jaguar, puma, armadillo and several species of monkeys and deer. Lizards, who once abounded along major rivers, have been hunted intensively so they are now very rare. In the tropics many varieties of snakes inhabit. Among the birds we find condor, vulture, toucan, parrot, cockatoo, cranes, storks and Hummingbird.

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Colombia has the largest number of species per unit area on the planet. There are more than 1800 species of birds recorded (more than the sum of all North America and Europe), from the Andean condor to the tiny hummingbird. Herbal Colombians have classified more than 130,000 plants.

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• NATURAL RESOURCES:

• Colombia has a great potential of energy resources (coal, mainly in the Guajira department). The oil industry is one of the main activities of national economy and generating many currencies. Among export natural resources are gold, nickel, copper, silver, platinum and emeralds. The large variety of climatic zones allows for a significant agricultural production and livestock. Forestry and fishing are also important.

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LANGUAGE:

Spanish or Castilian is the official language of Colombia and the languages of ethnic groups also are constitutionally recognized as official in its territory.60 Aboriginal languages are kept alive, for example Wayúunaike in Guajira; the Nasayuwe and Guambiano in Cauca; languages of the Chibcha family, the Sierra Nevada de Santa Marta and Cocuy among others.

Ancient sculpture: San Agustin

Modern sculpture: Fernando Botero

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Nairo Quintana-cycling Mariana Pajon – BMX cycling Carolina Ibarguen – long jump

James Rodriguez - football Radamel Falcao - football Pablo Montoya – car racing

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Gabriel Garcia Marquz – writer. Nobel literature

Manuel Elkin Patarroyo - scientist

Writer : 100 years of solitude

developed the world's first safe and effective malaria vaccine.

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Shakira-Singer

Paulina Vega-Miss Universe

Juanes-Singer

Sofia Vergara - Actress

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Superintendency Delegated for Energy and Gas Fuel

Jaime GuerraAugust 2015

SERVICE OF NATURAL GAS IN COLOMBIA

Superintendency of Public Services

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Capacity of the Nation

Article 8 of Law 142 of 1994 - Public Utilities Act

“In own way planning, allocate and manage the use of gas as fuel when it is economically and technically possible, through official, mixed or private companies “

Summary of the fuel gas sector in Colombia

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Article 5 of Law 142 of 1994

Indicates that corresponds to Municipality ensure the efficient delivery of water services (aqueduct), sewerage, cleanliness, electricity and gas fuel.

Also states the ways in which municipalities can ensure the provision of such services "(...) by official, private or mixed utilities or directly by the central administration of the respective municipality (...)".

Competences of the Municipality

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Municipal permits

Article 25 and 26 of Law 142 of 1994

The competent authorities should take into account that companies duly constituted to provide public services to operate should get, depending on the activity, concessions, permits and licenses.

The Utility Companies should be subject to standards of urban planning, traffic and transit, use of public space, security and public peace adopted by municipalities and is required to establish appropriate guarantees to the risks that could create.

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Institutional framework

Ministry of Mines and EnergyResponsible for policies related to public services

National Hydrocarbons Agency Resource management

Energy and Gas Regulation Commission Economic Regulation

Mining and Energy Planning Unit Technical Regulation

Industry players and users

Marketing (production, transport, distribution,

marketing and End Users)

Superintendency of Public Services

Inspection, Supervision and control of the

fulfillment or compliance of the normativity and

standars

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Superintendency functions• Performs the duties of inspection, supervision

and control of the persons providing the public services.

• Assesses the financial, technical and administrative management of providers of public services, according to the indicators defined by the regulatory commissions.

• Sanctions for non-compliance with the rules.

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Sector Structure

PUBLIC SERVICE HOUSEHOLD FUEL GAS: The set of activities arranged for the distribution of combustible gas by pipeline or otherwise, from a place of gathering large volumes or from a central gas pipeline to the installation of a final consumer, including its connection and measurement. (Article 14.28, Act 142 of 1994)

Production Transport DistributionMerchandising/

marketers Final user

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Natural gas industry in Colombia

Producers: 11Transporters: 9Commercializer: 29Distributers: 41

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Natural gas industry in Colombia

Market ManagerCentralize business transactions

It is responsible for:

1.Design, operation and management of the Electronic Bulletin Central, EBC.

2.Centralization of transactional and operational information: collect, verify, publish and maintain of information.

3.Management of marketing mechanisms in the primary market and the secondary market.

4.Report of information to regulatory, monitoring and control agencies for monitoring the market.

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Largest producers of gas fields and transport

network

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Evolution of Production by field (well)

Source: UPME

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Evolution of Production by field (well)

Average annual production per field (GBTUD)

Year GuajiraCusiana-Cupiagua Gibraltar

La Creciente

Other fields Total

2010 678 231 0 59 106

1.074

2011 365 278 2 60 102

807

2012 592 302 25 60 127

1.106

2013 588 382 31 59 177

1.237

2014 500 439 31 57 133

1.160

Source: UPME

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Evolution of Production by field (well)

Source: UPME

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Evolution of Production by field (well)

Participation by field in average annual production

Year GuajiraCusiana-Cupiagua Gibraltar

La Creciente

Other fields

2010 63% 22% 0% 5% 10%2011 45% 34% 0% 7% 13%2012 54% 27% 2% 5% 11%2013 48% 31% 3% 5% 14%2014 43% 38% 3% 5% 11%

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Transported volume 2013-2014Coast Region: 36%Interior region: 64%

Source: UPME

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Demand by Region 2013-2014

Coast Interior Isolated Area

Source: UPME

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Year Coast InteriorIsolated

area Total

2013

376

559

45

980

2014

388

616

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1.058 Variation 3% 10% 20% 8%

National demand by Destination (GBTUD)

Demand by Region 2013-2014

Source: UPME

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Demand by Consumer Sector 2013 – 2014

Unregulated Regulated

Source: UPME

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National Demand by Consumer Sector(GBTUD)

Year Unregulated Regulated Total

2013

778

202

980

2014

848

210

1.058

Variation 9% 4% 8%

Source: UPME

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Consumer demand by Sector– Unregulated 2013 – 2014

National Demand Unregulated (GBTUD)

Year

Natural gas

transpor-ters

Compressed natural gas for vehicles

Petro-chemistry Industrial

Thermo-electric

Refi-nery Total

2013 25 85 22 218 295 133 778

2014 25 89 20 254 341 119 848

Variation 0% 5% -9% 17% 16% -10% 9%

Source: UPME

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Power Generation Capacity

Net Effective Capacity

  Cogenerator Wind/Eolic Hydraulics Thermal Total

MW

82

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10.920

4.501

15.521 %

participation 0,53% 0,12% 70,36% 29,00% 

Source: UPME

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Thermal Generation Capacity

Combustible Diesel Coal Fuel oil GasGas-

Diesel Gas-Coal Total

MW

154

715 187

2.940

354

151

4.501

% participation 3,4% 15,9% 4,2% 65,3% 7,9% 3,4%

Source: UPME

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Thermal Power Plants

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Evolution thermal consumption 2009-2015

Source: UPME

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Thermal Plant consumption in January 2015 - June 2015

Plant Region

Average consumption

(GBTUD)Participation

(%)TEBSA total Coast 116,7 43%Termoflores 4 Coast 63,1 23%Termocentro 1 Interior 42,6 16%Guajira 2 Coast 12,8 5%Termovalle 1 Interior 7,5 3%Termosierra Interior 5,4 2%Termoflores 1 Coast 4,8 2%Merieléctrica Interior 4,6 2%Proeléctrica Coast 4 1%Termobarranquilla 3 Coast 3,1 1%Termobarranquilla 4 Coast 2,7 1%Guajira 1 Coast 1 0%Termoemcali 1 Interior 0,9 0%Termodorada 1 Interior 0,5 0%Termocandelaria 2 Coast 0,2 0%Termocandelaria 1 Coast 0,1 0%

Total consumption 270 GBTUD

Source: UPME

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Colombia, Population 48.32 million (December 2013)

Users connected to natural gas

No. usuarios %

Residential 7.114.886 98,2%

Commercial 128.921 1,8%

Industrial 4.675 0,1%

Total 7.248.482 100,0%

E1 E2 E3 E4 E5 E6 Total

1.439.274

2.697.593

1.926.180

640.954

253.037

157.845

7.114.883 20% 38% 27% 9% 4% 2% 

Total number of residential users connected by stratum

Source: UPME

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Law 1715 of May 13, 2014 establish "Through which the integration of non-conventional renewable energy to the national energy system is regulated"

-Key-aspects of Law 1715 2014: objective and purpose, some definitions, competencies, proposed mechanisms

Currently this Law is in process of regulation

Non-conventional Renewable Energies

Colombia started to develop this theme last year with the issuance of the Law 1715.

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Objective of the energy and mining plans

Achieve internal and external supplies of energy and minerals efficiently, with minimal environmental impact and creating value for regions and populations

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Unconventional sources of renewable energy

Installed Capacity (power) - renewable energy

  TechnologyCapacity

(MW) Observation

Electricity (MW)

Solar photovoltaic

4,5 Isolated Systems

Solar photovoltaic

4,5 Professional applications

Wind (electricity generation)

19,5 Jepirachi parkSmall hydro plants's(<10MW)

168,7  

Small hydro plants's (10MW<P<20MW)

296,0  

Biomass‐Cogeneration

268,2 (8 mills)

Total

761,4  

Heat (MW thermal)

Biomass‐ direct heat -- No information

Solar thermal (water heaters)

77,0 110.000 m2 solar collectors

Nuclear

0,1 Research Reactor

Total

77,1  

Mechanical energyWindmills Gaviotas, Jober, Indusierra and other 500 Water pumping

Source: UPME

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Purpose

• "... to promote the development and use of non-conventional energy sources, especially those from renewable sources in the national energy system, by integrating the electricity market, participation in non-interconnected zones and other energy uses as a means necessary for sustainable economic development, the reduction of emissions of greenhouse gases and energy security. With the same purpose it is to promote efficient energy management, comprising both energy efficiency and demand response. "

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Finality

• "... establish the legal framework and instruments for the promotion of the use of non-conventional energy sources, especially those from renewable sources, as well as for the promotion of investment, research and development of clean technologies for energy production, energy efficiency and demand response in the context of the national energy policy ... "• "... establish lines of action for the fulfillment of commitments made by Colombia in renewable energy, efficient energy management and reduction of emissions of greenhouse gases ..."

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Promotion, encouragement and incentive to the development of activities of production and use of USRE (Unconventional sources of renewable energy) is declared as a matter of public utility and social interest, public and national interest, essential for:-to ensure the full and timely diversification of energy supply,-the competitiveness of the Colombian economy,-the efficient use of energy,-the protection of the environment, and-the preservation and conservation of renewable natural resources.

This qualification will have effects in terms of land management, urban planning, environmental planning, economic development and administrative procedures in competition and selection.

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Unconventional energy sources (UES) and Unconventional sources of renewable energy (USRE)

Unconventional energy sources, They are composed ofa•Nuclearb-Unconventional sources of renewable energy (USRE)

•Eolic (wind)•Geothermal•Solar•Biomass•Small hydropower plants

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Large and small-scale Self-generation and surplus

That activity carried out by individuals or corporations that produce electricity mainly to meet their own needs.• In the event that surplus power generated from such activity, these may be delivered to the network, in the terms established by the Commission for that purpose.• The Mining and energy planning unit set the limit to be considered small or large scale.• Surplus: Surplus energy once covered the needs of own consumption, resulting from an activity of self-generation or cogeneration.

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Other definitions:

• Distributed generation. Is the production of electricity, near consumption centers, connected to a Local Distribution System.• Efficient management of energy. Set of actions to ensure energy supply through the implementation of energy efficiency measures and demand response.• Demand response, consists of changes in energy consumption by the consumer, with respect to a usual pattern of consumption in response to price signals or incentives designed to induce low consumption

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Government administrative entities

• Ministry of Mines and Energy• Energy Regulatory Commission and Gas -CREG• Mining and Energy Planning Unit -UPME• Ministry of Finance and Public Credit• Ministry of Environment and Sustainable Development• National Environmental Authority Licenses• Regional Autonomous Corporations• Superintendency of Public Services• Superintendency of Industry and Trade

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Non-Conventional Energy Fund and Efficient Energy Management:

•To fund programs Unconventional energy sources and Efficient energy management.•The resources will be provided by the Nation, public or private entities, as well as multilateral and international agencies.•It will be regulated by the Ministry of Mines and Energy.•They may be financed, among other, programs and projects directed to the residential sector at levels 1, 2 and 3, both for the implementation of small-scale self-generation and for improving energy efficiency projects.

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Incentives for investment in projects of Non-conventional energy sources

• Rent-Reduce your income annually for five years following the tax year in which they made the investment, fifty percent (50%) of the total value of the investment.-The value to be deducted for this purpose, in no case may exceed 50% of the taxpayer's net income, determined before subtracting the value of the investment.

• VAT (Value Added Tax)-The equipment, components, machinery and services domestic or imported which are intended for pre-investment and investment for the production and use from non-conventional sources of energy as well as for measurement and evaluation of potential resources will be exempt from VAT

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Incentives for investment in projects of Non-conventional energy sources

• Tariffs-Exemption payment of customs duties on imports of machinery, equipment, materials and supplies intended exclusively for works of pre-investment and investment projects with Non-conventional energy sources.It will be applicable on machinery, equipment, materials and supplies that are not produced by the domestic industry.

• Accelerated depreciation of assets-Applicable to machinery, equipment and civil works necessary for the pre-investment, investment and operation of the generation of non-conventional energy sources, which are purchased and / or built solely for that purpose.-The Annual depreciation rate will not exceed twenty percent (20%) as annual global rate.

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Carrera 18 No. 84-35PBX: (57-1) 691 3005sspd@superservicios.gov.cojguerra@superservicios.gov.cowww.superservicios.gov.coBogotá, D.C. - Colombia

Thank you!