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Legal Aspects of the Gas and Energy Sectors in Colombia

Jaime Herrera, Jose Alejandro Torres, Oil & Gas Development in Latin America (1999)

The regulatory development of the gas and energy sectors in Colombia has been decisively influenced by the global political and economical trends. The late 1980's discredit and fall of command economies' paradigms as politically desirable means to attain conglomerate welfare, affected the economic axioms over which development planning was carried in Colombia. Formerly it was perceived that State direct action in the economic scenario served as the necessary thrust to correct market failures, which could not be dealt by private initiative alone. Under this view, the State basically acted as supply upgrader to satisfy the ever-growing demand.

In parallel the necessity of protecting infant industries lead to a closed-door model, in expectance of the development and maturity of the home market. By 1990 the Colombian economic scenario was characterized by an long term central economic planning, which varied from administration to administration, coupled with a strong State presence in a wide variety of industrial and commercial activities, with little private participation, and certainly a negligible presence of foreign direct investment.

The public utilities sector was no exception to the above. State provision of these services was not only necessary in practice due to the magnitude of the required investments, but private investment in this area was curtailed d