Colombia: Petroleum Industry Reawakens, Union Concerned about Privatization Drive
The Colombian government has announced that it will be selling US$10 billion worth of state assets, in what could be the largest round of privatizations in Latin America since the 1990s. The stakes on the block include shares from the state-owned oil company Empresa Colombiana de Petroleos (Ecopetrol), which has elicited angry responses from unionists who completed a month-long strike against privatization earlier this year. The sale announcement also follows recent government reforms making it easier for foreign oil companies to do business in Colombia. Spokespersons for multinational oil corporations have said that the security conditions for petroleum exploration and extraction have improved greatly under President Alvaro Uribe's aggressive war against rebel groups.
Union rejects stock sale, privatization
Colombia is poised to sell off as much as US$10 billion of stakes in state-owned companies in the next few years, evidently playing catch-up with the privatization trend that swept through Mexico, Argentina, Chile, and other countries in the late 1980s and early 1990s. Alberto Carrasquilla, Colombia's finance minister, told London daily The Financial Times that President Uribe's administration was getting ready to sell assets ranging from electricity distributors to stakes in banks.
Colombia's privatization drive is designed to raise much-needed additional funds for social and infrastructure programs during a period of mandated fiscal austerity. Under an agreement with the International Monetary Fund (IMF), Colombia has promised to limit its fiscal deficit to no more than 2.5% of GDP this year.
"We have a relatively ambitious privatization plan in Colombia, perhaps the most ambitious in Latin America," Carrasquilla said. "Initial valuations exist in most cases, and we're now beginning to look at investment banks to manage the sales."
First to be sold off will be an 8% stake in Isa, a regional power-transmission company. Together with Transelca, another distributor, the sales are expected to net about US$200 million this year.
Stakes worth another US$300 million to US$400 million in companies such as Ecogas, a natural-gas distributor, and two banks, Bancafe and Interbanco, are slated to be sold to private investors in 2005.
The sale of some shares in Ecopetrol, the state-owned oil corporation, is also under consideration, following a recent change to the company's statutes. However, the full privatization of Ecopetrol--which would be the largest sell-off by far--has been ruled out by Uribe.
In April and May, the Union Sindical Obrera (USO) of Ecopetrol workers conducted a 36-day strike, which had its origins in the rejection of privatization of the company, according to USO vice president Hernando Hernandez. Hernandez said the announcement from Carrasquilla "puts the agreements between the USO and Ecopetrol in doubt."
The two sides signed the agreements to end the strike, a strike where 248 workers, including Hernandez, were fired. The USO represents 4,000 of the 7,000 workers at Ecopetrol. Shortly after the story in The Financial Times came out, union leaders sought to meet with officials from Uribe's administration to clear up what the share sales would mean for them.
Human rights and labor organizations regard Colombia as one of the most dangerous places in the world for labor organizers, a country where mass arrests, threats, and murder frequently assail labor movements.
Colombian law circumscribes the government's ability to sell state property. Assets must first be offered to cooperatives and similar organizations, for example. Nonetheless, even though the government expects the process will take at least five years, growing fiscal pressures could lead to added urgency. For one thing, the authorities need to find extra resources to maintain military programs.
Various categories of nondiscretionary spending are also growing rapidly. …