Colombia gets new energy and mining minister

It was another intense week for Colombia after the initial announcement that the government of Juan Manuel Santos has been holding “exploratory” peace talks with leftwing Farc rebels.

In order for Santos to be able to do that in full, he needs to have his so-called “cabinet for peace” in place. 

It took a while, but he finally got there, having ratified his agriculture minister and appointed the new interior and environment members of his cabinet, on friday.

But much of investors focus will probably be on the appointment of Federico as energy and mining minister.

Rengifo who, replaces the incoming finance minister Mauricio Cárdenas, previously served as interior minister. 

He will be at the helm of the Colombia’s oil and mining boom that has transformed the country into the region’s fourth-largest oil producer and the world’s fourth-largest exporter of coal.

During the peace talks, some believe he might have to take an active role in the negotiations of how royalties from oil and mining companies would be distributed throughout the Andean country.

“This is a ministry that’s moving in the right direction, where there are some important decisions to be made and policies that need to be implemented,” Santos said after appointing Rengifo, an economist and lawyer who also has served on the board of state-run oil company Ecopetrol, a place where he will return now, since energy and mining ministers hold a seat there.

And it seems that will be the first place he might have to do some firefighting, following local media reports that the company’s president, Javier Gutiérrez, and his deputy, Pedro Alfonso Rosales, are being investigated for embezzlement.

Colombia’s state-run oil company has been one of the main propellers of the Andean country’s growth. 

And with production rising 16 per cent per year since 2.008, Ecopetrol is today among the best performing energy players in Latin America.

The company has an $80bn investment plan by 2.020 and the coastal refinery of RefiCar is part of that.

But it seems to be a little overrun on costs there, about $1.4bn, from an initial budget of around $3.4 to about $4.9, according to the exiting finance minister, Juan Carlos Echeverry. 

“This is one of several Ecopetrol’s investment projects. 

But slowly, over the past one and a half year or so, I’ve seen overruns or $100mn and $200mn, here and there,” Echeverry told beyondbrics, “all of that added up, so I’d say they should manage their investments better.”

For some, such as the people of Celfin Capital in Medellín, “the project that started in january should be advancing at a rate of 4 per cent per month, in fact it is way behind schedule and as opposed to being finished around December 2.013 we are looking at mid-2.014 and that is unacceptable to many.”

Rengifo, it seems, has his work cut out for him.