Colombian Frontrunner Vows Swift Unwind of Petro’s Anti-Oil Push

Colombia ended last year with a fiscal deficit of more than 6% of gross domestic product, wider than that of most of its peers. Photo by Jair F. Coll /Photographer: Jair F. Coll/Bloom

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(Bloomberg) — Colombian presidential frontrunner Abelardo de la Espriella plans to start rolling back the government’s anti-oil policies immediately after taking office, signaling that the Andean nation is once again open to new investment in the sector. 

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With its very first executive moves, his government would allow for new oil and gas exploration as well as fracking pilot programs, according to José Manuel Restrepo, his running mate. This would make it clear that Colombia is welcoming back private capital, he added. 

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“We must start by sending clear signals, of certainty, of confidence,” Restrepo said in an interview Thursday in Bogota. 

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Since taking office in 2022, President Gustavo Petro has sought to wean the Andean nation off fossil fuels by halting new drilling licenses and seeking to ban fracking. That led to stalled crude production and a widening deficit in natural gas, though oil remains the nation’s biggest export. 

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The conservative ticket heads to a June 21 runoff against Iván Cepeda, a leftist senator allied to Petro. He’s seeking to make fracking illegal, raise taxes on the wealthy, and increase the role of the state in the provision of services such as health and education.

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Stocks, bonds and the peso rallied after De la Espriella and Restrepo’s surprise first-round win, as investors priced in a greater chance of a return to Colombia’s traditional pro-business policies. Restrepo said that by returning to a path of fiscal sustainability, the country can lower country risk and thereby slash interest costs on public debt. 

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Restrepo, a former finance minister, said he would take on a more prominent role than vice presidents normally have in Colombia. This will include managing relations with investors and credit rating agencies, coordinating cabinet affairs, and helping steer economic policy across key sectors including the economy, energy, and education, he said. 

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To help ensure a quick revival of Colombia’s energy sector, a De la Espriella government will also prioritize naming a new board to state oil company Ecopetrol SA so that it can elect a new chief executive officer after the current one was placed on leave, Restrepo said. 

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Besides energy, their government would use tax breaks and regulatory benefits to revive investment in sectors including infrastructure, housing, industry and technology, Restrepo said. 

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The vice presidential candidate outlined plans for a Colombian version of Argentina’s RIGI, a large-investment incentive regime that grants tax, customs, foreign-exchange and legal-stability benefits to major projects. Colombia should also pass the necessary regulations to make a nuclear energy program possible, he added. 

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An energy push is needed to prevent blackouts, he said. The nation gets most of its electricity from hydropower, and Colombia is set suffer droughts from an expected development of El Niño.

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Fiscal Gap 

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Colombia ended last year with a fiscal deficit of more than 6% of gross domestic product, wider than that of most peers. A De la Espriella administration would seek to eventually return to a balanced budget law that Petro suspended last year, and target primary surpluses and a falling debt-to-GDP ratio, Restrepo said.