Translations

ECOPETROL - Strengthening capacities of local governments and citizen control over the use of oil royalties in Colombia.

7. Community involvement

Social investment

Sector Industry

Year 2011

Country Colombia

Transmitter

Context

As the main Colombia’s Oil and Gas Company, Ecopetrol generates significant amount of royalties that are directly received by the local provinces and municipalities where the company operates. The Colombian legislation indicates that resources from royalties must be invested in development projects focused mainly on water and sanitation, reduction of infant mortality, education and health. However, even though most of municipalities have received thousands million pesos over the last 30 years, most of the municipalities still remain with low development levels and basic needs aren’t met. The main reasons of this inefficiency are weak projet management and implementation control by national government over the use of royalties by the local governments, and on the other hand, communities’ lack of knowledge about the origin and destination of royalties and unawareness of their constitutional right to participate. Being the largest company of Columbia (17% of the income of the country), Ecopetrol has a role to play to promote actions with all its stakeholders to prevent and mitigate the impact of its activities through the best use of those royalties to serve the real needs of the communities.

Objectives

- Strengthening capacities of local governments for the efficient management of royalties, aiming the increase of development levels of municipalities.
- Strengthening processes of citizen oversight and social control over the use of oil royalties, through the creation of civil society committees where members are trained and empowered to follow up their governments’ use of royalties.

APPROACH

1.   Diagnosis and selection of municipalities based on the analysis of development levels, amount of royalties and success potential. Technical assistance provided to 28 municipalities in planning, project management, as well as in procurement processes and public auditing. (ex of projects where technical assistance was given: from 0 to 70% drinking water coverage in the province of Mani, Casanare ; 800 children of rural areas now have a transport to go to school, increase infrastructure of 21 schools)
2.   Identification of priority needs and selection of development projects financed with royalties resources that will receive technical assistance.
3.   Agreements with mayors of selected municipalities, about the projects to assist and about the action plan.
4.   Execution and assessment of the action plan and of the projects’ impacts on development.
5.   Identification of possible members of the civil society committees for social control and monitoring of the investment of royalties and invitation to participate (community leaders and representatives of organizations such as guilds, chambers of commerce and public and private universities).
6.   Search of partners and funders of the committees
7.   Creation and constitution of committees (6 committees already created, in 7 regions = 1/3 of the regions receiving royalties)
8.   Establishment of action plans for each committee (includes: follow up to projects financed with resources of royalties, training sessions for community, journalism contests about the use of royalties, candidate forums, and participation in accountability sessions of mayors and governors).
9.   Execution and assessment of results.

CONTRIBUTION TO COMPANY PERFORMANCE

- Decreased dependence on the company by governments and communities to manage the local y and regional development.
- Recognition of its CSR policy : A+ by the GRI ; most admired company in Colombia by the opinion; from 2005 to 2010 : 3 times Best Transparent company of Colombia

Benefits

- Increased levels of development and quality of life.
- Capacity building in local governments to invest resources from royalties.
- Empowerment of citizens to exercise social control and manage their own development.