Colombia’s President Ivan Duque To Tap Ecopetrol For $1 Billion USD To Fund Promises, Quell Protests
At the instruction of the Colombian President Ivan Duque’s finance ministry, Colombia’s state-controlled petroleum company, Ecopetrol (NYSE: EC, BVC: ECOPETROL) has called for an extraordinary meeting of shareholders for December 16th at 7:30am in Bogotá’s Corferias Convention Center to consider an extraordinary dividend as solicited by Colombia’s Ministerio de Hacienda y Crédito Público (Minhacienda), Colombia’s finance ministry.
The Colombian government seeks a distribution of $1.1 billion USD or $3.7 trillion Colombian Pesos in a special dividend. With the government owning 85.5% of Ecopetrol the measure is certain to pass. Colombia’s government would receive approximately $920 million USD of the dividends distributed. The dividends would be distributed on December 23 for minority shareholders or the 26th for the government.
- Total Ecopetrol reserves available (COP) $3,691,130,198,643
- Number of shares outstanding 411,166,946,901,959
- Dividend amount $3,659,385,827,427 COP
- Dividend per share $89 COP
- Ecopetrol remaining reserves $31,744,371,216
The immensely unpopular President Ivan Duque has only a 26% approval ratings in recent polls, disliked by broad swaths of society across the political spectrum. Duque and the candidates supported by his Centro Democratico party, founded Duque’s political patron & ex President Alvaro Uribe were humiliated in October’s local elections across the country. Massive protests and strikes were organized across Colombia, and started two weeks ago, disrupting travel, commerce, and services. Uribe is currently the first former president of Colombia to face criminal trial in history, now answering to charges of witness tampering and accused of a cozy relationship with paramilitaries and narcotraffickers.
The strikes and protests in Colombia in the past month were originally called by labor unions, but were soon joined by students who say Duque has reneged on last year’s education pact, indigenous groups and urban supporters who denounce Duque for not adequately protecting rural social leaders (hundreds have been assassinated during his term), civil groups protesting security forces ineptitude (the Defense Minister resigned weeks ago after a government bombing operation killed several children), those upset with corruption, and resistance of Duque & his party in implementing the historic peace accords reached by the previous administration. Even the other conservative or right wing-parties joined in the protests against Duque.
Duque announced several measures hoping to reverse popular sentiment, such as a 3 day tax holiday on the national VAT of 19%, and reducing the health contribution of pensioners from 12% of their pension to 8%, along with other tax breaks. To fund these measures the government will need to find other revenues, such as tapping into Ecopetrol’s assets.
Ecopetrol has recently made significant purchases, including a joint venture with Occidental (NYSE: OXY) in Texas, and purchasing Chevron’s (NYSE: CVX) upstream assets in Colombia. This latest move weakens Ecopetrol’s balance sheet and can negatively affect liquidity. Raiding assets to address political expediencies has been a constant problem in Latin America when politicians have control of enterprises.