Biofuels in COLOMBIA

8/2/2019 Biofuels in COLOMBIA

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BIOFUELS

in

COLOMBIA


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Highlights

Approximately 4.5 million hectares (HA)are available in the Colombian Altillanura

for agriculture, without the need

for deforestation


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Highlights

The Altillanura region is literally the highplains of Colombia. Its low elevation ranges

between 150-250 meters. The geographicalregion is mostly composed of the states ofMeta, Vichada, and Casanare in centraleastern Colombia. Remarkably, this area

holds 33 percent of Colombias totalwater resources.


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Highlights

The tropical savannas of the Altillanura are acidsoils that require intensive soil management (ph

4,5). The soil has a high aluminum content andlacks organic mater, calcium, magnesium,potassium, and phosphorus. However, the flattopography is perfect for grain and oilseeds

production, and its warm and rainy climate, withannual rainfall of between 1800-3500 millimeters


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Highlights

Climate:

Precipitation between 2.500 and 3.500 mm/year. Luminosity 1.800-2.200 hours/year.

Temperature between 26C and 32C Relative humidity: low.

Soil:

River muds and clay. PH 4,0 - 4,5. Soil depth 30-50 cm.. Natural drainage. Average slope 8.


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Why COLOMBIA

Government incentives and an advanced regulatory framework: Colombiahas the most developed regulatory framework in the region along with

Brazils. e.g: Up to 100% Income tax exemption for new investments in lateyield crops.

Diversity of regions suitable for crop development: Out of 41 millionhectares suitable for agro development, 6,5 million have potential forbiofuels.

High crop Yields: Colombia is the worlds fifth palm oil producer andcounts withthe highest sugar cane productivity due to its location in the tropical zone

with thehighest efficiency in bioenergetic production.


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More reasons Why

Colombias biofuels production does not threaten itsalimentary security:41 million hectares available for crop development,privileged weather conditions and surplus in production of

raw materials. The 6,5 million hectares suitable forbiofuels are mostly inappropriate for the development ofalimentary related crops.

Leader in the sustainable production of biofuels: regulationfor the consumption of biofuels to achieve greenhouse

effect gas reduction (currently B5and E10) and availabilityof land for biofuels related crops where it is notlongerpossible to have forest or jungle.


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TAX INCENTIVES

Exempt IncomeApply for:

1. New crops: Net income generated for the exploitation of newcrops

including oil palm, rubber, cocoa, citric trees and all other late-yieldfruittrees.

The crops must be planted between 2003 and 2013 and the tax

exemption applies for ten (10) years since the beginning of the

production.

The new crops must be registered before the Ministry ofAgriculture

and rural development.


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TAX INCENTIVES

New plantations: Investments in new forest

plantations, sawmills and

timber tree plantations.

100% of the income coming from these activities is

excluded.

Incomes excluded are those caused since 1 January2003 and there is not term for the exemption.


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TAX INCENTIVES

and renovation of the plantation of oil palm,as well as the construction ofinfrastructure forthe conversion of biomass.

Finally, the Capital Risk Fund of the AISProgram supports agribusiness productioninitiatives in land where the privateinvestments are not easilyattracted to. This isdone according to the budget availability ofthe fund.


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Financial support

Additionally in the framework of the Safe Agro

Income Program (Programa Agro

Ingreso Seguro -AIS-) there are some financial

instruments for the exploitation of crops thatgenerate biomass for the production of ethanol and

biodiesel.

Furthermore, the benefits offered among others

through the Incentive for the Rural Capitalization

(Incentivo a la Capitalizacin Rural (ICR) ), are

establishment


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Single Emterprise Free Trade Zones

The new law concerning Single emterprise FreeTrade Zones establishes that an agro industrialproject (including biofuel projects) can be eligible

to the benefits extended by this law if the projectinvolves at least US$17,4 million investments, orcreates 500 jobs. Qualified businesses will benefitfrom a 15% income tax rate compared to the 33%

applicable in the rest of the country , withouthaving to locate in a traditional Free Trade Zone toenjoy the FTZ status.


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BiodieselThe national government is promoting palm oilplantations as part of a policy to promote

growth in strategic sectors. Incentives and taxexemptions for the production and

commercialization of biodiesel for use in dieselengines have been created. Also, a

Ministry of Mining and Energy resolution extendsincentives for the 5% biodiesel blend.

Furthermore, income generated by crops used asbiodiesel feedstock is also tax-exempt.


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BIODIESEL

There is not enough supply of C.P.O in the LOCALmarket, and if the cultivated areas dont grow as fast

as demand, Colombia will have to import

Biodiesel installed capacity is being utilized at lessthan 50%.

The Bio Fuel law enforces 10% substitution by 2010and 20% by 2012.

With the rate of growth of the palm cultivated areasduring the last seven years, it would take more than100 years to satisfy the demand


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BIODIESEL

CPO in the world market continues to grow due tolarger demand than supply. There is a global tendency tosubstitute BIODIESEL and TRANS VEGETABLE OILS.

In Colombia there is an indifference between the CPO

export price and the local price, due to the existence ofa Stabilizing Fund (FEP).

The local price is high because of a supply deficit.

The CPO price is fully correlated to the Oil price.

Biodiesel Price COP$9.567,53 per Gallon U$ 5,19(5/04/2011)


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Market Potential

By 2010 the complete national territory must beusing a blend of E10.

As for biodiesel, by 2020 a blend of B20 will berequiredBy 2010, 326 thousand tons consumption for a B5

blend.

As for biodiesel, with the 5% requited mix,consumption is expected to grow from 55thousand tons in 2007 to 389.5 thousand tons in2015.


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Opportunities for Investment

The US cement company Pegusa has recently purchased13,000 hectares in Puerto Gaitan for a joint sugar/ethanolproject. The group bought the land together with aColombian corporation called National Energy S.A. Inaddition, Monsanto, who has worked in Colombia for 40years, is also watching the regions development, hoping tosell its roundup ready technology there. According toMonsantos director for the Andean region, the future ofColombias ag sector is the Altillanura, and few places in the

world today have similar potential for agriculturalproduction. They plan to build demonstration farms in thearea to showcase their technology and inputs.


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sourcesFinagro: www.finagro.com.co

Fedepalma: www.fedepalma.org

Ministerio de Agricultura de Colombia: www.minagricultura.gov.co

Ministerio de Hacienda y Credito Publico de Colombia:

www.minhacienda.gov.coLEY 939 DE 2004

DECRETO 197015 JUN 2005

RESOLUCIN 00351
http://www.finagro.com.co/http://www.minagricultura.gov.co/http://www.minhacienda.gov.co/http://www.minhacienda.gov.co/http://www.minagricultura.gov.co/http://www.finagro.com.co/


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By: Juan Carlos Duque H

[email protected]

Phone +57 3216482948
mailto:[email protected]:[email protected]

Documents

Biofuels in COLOMBIA