Regulatory management and institutional relations

For an increasingly proactive management

We deployed our relationship strategy with the Government and union institutions in order to promote effective regulatory management and lead strategies to strengthen the demand for natural gas in Colombia.

Why is this important?

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The transportation of natural gas in Colombia is a highly regulated activity, especially in relation to rates, access rules, operation and commercialization of the service. For this reason, at TGI we act proactively with technical and economic arguments that allow the regulator to consider the points of view and experience of the actors in the day-to-day operation. This way, we contribute to the adequate establishment of the remuneration for the service, the sustainability of the industry and the achievement of financial objectives that we set ourselves as a company.

It is with the regulatory management that we carry out the promotion of initiatives and modifications to the regulation to achieve greater opportunities, both for the company and for the development of demand. Therefore, it is essential to work together with companies, guilds, organizations and government entities to build a regulatory framework in which the development of the sector is promoted.

Likewise, from the management of relations with guild institutions and with the national government, which are part of our stakeholders, we manage projects related to strengthening the demand for natural gas and lead strategic conversations around challenges in the sector.

How do we manage it?

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Since the beginning of 2020, we have established key initiatives for the contribution of each area, in order to achieve the corporate strategy. The Regulation Management developed four main objectives:

We identified remuneration alternatives for the Ballena-Barrancabermeja infrastructure in order to provide greater competitiveness to the sector.
We fostered the modification of regulatory restrictions to achieve vertical integration in the gas sector.
We promoted the development of tax and regulatory incentives that encourage the use of natural gas.
We promoted the inclusion of initiatives for TGI's Transportation System within the next Supply Plan, which will be developed in 2021 by the Ministry of Energy.

(415-1) (Own) Our Code of Ethics prohibits direct or indirect contributions to political parties and candidates, political proselytizing activities, and facilitation payments. In addition, it establishes guidelines for lobbying activities, in case they ever take place. Due to this provision, in 2020 we did not record any contributions related to political influence on behalf of TGI. The corporate guidelines establish this prohibition, contained in the Code of Ethics of GEB and of TGI.

Likewise, we carried out activities so that regulations and policies related to tasks of interest to TGI envisage the practices of both our company and other international companies, in order to have a regulatory framework for the development of the business and the market. Some of these actions focused on the definition of the remuneration methodology for the transportation activity, the transportation market, and the Natural Gas Supply Plan.

The performance of regulatory management considers corporate indicators reported in the monitoring of the strategy, management indicators and monthly progress monitoring in the fulfillment of the objectives established. In addition, it is directly connected with the issuance of actions by the national government of interest to our company, as well as the impact analysis for TGI of the published regulations and the proposals made on the different issues for the benefit of the sector.

The implementation of the regulations is carried out through the company's areas with the support of the Regulation Management, with follow-up by the Internal Audit and Compliance areas and the external audit of management and results.

We contributed COP 485 million in 2020 to the different associations in which it participates, related to membership, participation, and support fees.

Based on corporate objectives, our company is in constant relationship with guilds and institutions, especially in line with the new Management and GEB's new strategy, which seeks to have only one strategy articulated for relations with guilds. This is a resource that we leverage on to develop a joint agenda that allows us to participate in scenarios where important decisions are made, and to have strategic allies that provide support for the development of the pillars of corporate strategy.

At TGI, we seek a strategic relationship with allies such as Andesco, Naturgas and, since 2020, ANDI. Through our participation we contribute to the consolidation of development plans in the regions. An example of this is our relationship with the Valle del Cauca Trade Guild Committee, the Buenaventura Trade Guild Committee and the Más Guajira Group.

Anexo Gestión Regulatoria y Relacionamiento

What we achieved in 2020

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Facing the CREG’s new transport remuneration methodology proposal, at TGI, we proposed new adjustments to facilitate access to new gas sources and facilitate transactions between systems.

Based on the promotion, comments and proposals made directly by TGI, through guilds and other associations, we mobilize initiatives, achieving the following:

CREG issued a new draft methodology for calculating the WACC rate, which will evaluate the recognition of the risks faced by the transportation activity in Colombia.
The Ministry of Mines and Energy issued the update of the Natural Gas Supply Plan, which contains projects that we are responsible for executing first at TGI, as well as the project for the Pacific Regasification Plant, which will be awarded in a selection process, where we have an interest as a company.
Final issuance of the investor selection documents by UPME on the Pacific import infrastructure, which started the process for its award.
Inclusion of the entry-exit methodology for gas transportation in the final document of the Energy Transformation Mission and other topics, such as the use of regasification plants, promotion of gas thermal demand and gas supply planning for 10 years. Likewise, CREG included the entry-exit in its medium-term plans, which favors the gas market.

In addition, thanks to the focus on institutional strengthening, we were able to actively participate and contribute in the following activities:

Accompaniment to the implementation of the resolutions issued by the CREG, as a mitigation of the impacts caused by the Covid-19 on the gas sector (CREG 042 and 060 of 2020).
The presentation of TGI's vision for the remuneration of the natural gas transportation activity before government entities and trade guilds, which was supported by the Quantum consultant.
We led strategic conversations in guild spaces around challenges in the sector and we participated in spaces for the co-creation of initiatives.
We participated in the NGV Committee of Naturgas, of which Ecopetrol and Vanti are also part, and which aims to stimulate the demand for vehicular natural gas. With them, we designed projects to encourage the growth in demand for dedicated vehicles and conversions.
We supported Naturgas' Una Elección Natural campaign, which aims to position natural gas as a clean energy source.
In the Más Guajira Committee, led by ANDI, we had an outstanding participation for the development of strategic lines for the region on issues of drinking water and basic sanitation, biodiversity and development, given the Covid-19 pandemic and the improvement of other social indicators. Likewise, we had participation in the Energy Discussion Group.
With Andesco, we developed strategies to support the positioning of the public services sector in times of pandemic and we supported awareness about the payment of services, among others.

Challenges for 2021

At TGI we have the challenge of promoting in 2021 the issuance of the regulation of guarantees, access and commercialization of the services of the Regasificadora del Pacífico.

Apply the gas transportation remuneration methodology issued in 2021, considering possible regional or national stamps for some gas pipelines, the WACC rate that adequately remunerates the transportation activity, as well as the promotion of the entry-exit for the next rate period (activities from 2022 to 2025).
End 2021 the process for assets that have completed their regulatory useful life, with a rate that adequately remunerates replacement investments or adjustments to continue operating the assets.
Obtain the CREG's assessment of the projects of TGI's own plan in 2021, as well as the promotion of new projects that improve the reliability and supply of natural gas in the next updates of the plan, between 2022 and 2024.
Promote the review and adjustment of the vertical integration rules of the natural gas sector between 2023 and 2024.
Manage with the CREG to ensure that its regulatory agenda defines the commercialization and guarantees scheme in the regasification plants and the design of the missing regulations associated with the Buenaventura plant.
From the engagement strategy, continue supporting Naturgas' Una Elección Natural campaign.
Continue our work to position natural gas as a clean and natural energy source, key in the energy transition and the decarbonisation that the country needs, incorporating an active work with respect cargo transport and use in the industry.
Build an external relations strategy that allows defining an agenda with each union, as well as accountability mechanisms.
Continue supporting the program that promotes gender equity and equality - An Energy that Transforms - which also involves the Ministry of Mines and the Ministry of Labor, and in which TGI participates as a member of the Consultative Committee.