Colombia Oil Royalty Management: Advisory Services Facility for Latin America and the Caribbean

An important factor for the sustainability of the oil and gas sectors in Colombia is the local management of royalties and the public perception of the benefits generated by the oil companies for local communities. However, public opinion indicates that the fiscal benefits from these sectors fail to reach the local communities due to complex regulations and the poor management of royalties at the sub-national level. Furthermore, the scattered geographical distribution of petroleum operations in Colombia makes the even allocation of funds a challenging task. These problems, along with the socio-economic tensions in rural areas, have led oil companies to create community-based projects directly financed with the companies’ resources in an effort to enhance living conditions.

IFC is supporting the development of Colombia’s oil sector by providing financial and advisory services to the private sector in the form of loans and investments (equity). The project leaders will work with IFC clients, such as Petrotesting and Kappa, to promote specific measures and practices in order to help improve the allocation and leverage of oil royalties in the municipalities where the oil companies operate.