Ecopetrol S.A. (NYSE:EC) Q3 2022 Earnings Call Transcript

This has no cash impact whatsoever, but what it does is that it allows us to prioritize projects and to measure projects in terms of their carbon footprint competitiveness. What this will do is that it will — and what this actually does is that it actually in a way rewards projects that have a low carbon footprint in that they don’t have to reflect that cost burden, and it punishes projects with a high carbon footprint through an incremental cost. Again, it’s theoretical, right? It’s not — these amounts do not go to a purse. They do not go to a fund or anything like that and they don’t have any cash implication as of now. As we look into the future, we are looking at mechanisms to see whether eventually this could actually translate into a real fund whereby what we accumulate in the fund is used to fund energy transition projects, right?

But again, this is something that is still on paper and that we are debating as a best practice in the industry. With regards to the carbon tax as such, in Colombia, there is an existing carbon tax that it has different mechanisms of the measure but it ultimately translates into the equivalent of $4 per tonne of immediate carbon to the system. What the tax reform does is that it takes that $4 per ton and it takes it on average on average to about $20 per ton, right? On average, this depends on the specific product and it depends on the place in the value chain where you’re actually asked, right? Within the Ecopetrol Group, Ecopetrol Asia and are responsible for this tax they either pay it directly or indirectly, right? But it does have an effect on them.

In the context of the total tax reform numbers that we have been discussing, it is not a material item. Thank you, Andres.

Andres Duarte: Thanks Jaime.

Operator: At this moment we have no further questions. Mr. Bayon do you have any final remarks?

Felipe Bayon: Well, thanks and I just want to thank everyone for taking part in today’s conference call. Thanks for the interest in Ecopetrol. Thanks for the questions. Hope to see you sometime soon and please stay safe. Have a great day.

Operator: Thank you everyone. You may disconnect now.