Project regulation by the Ministry of Mines and Energy regulating overlap of projects in the mining and energy sector has been published for comments
On July 14, the Ministry of Mines and Energy (“MME”) published through its website a project resolution to establish “guidelines to facilitate the coexistence of project in cases of potential partial or complete overlap”, a project regulation that responds to the ever more frequent occurrence of overlapping between projects of the mining and energy sector, which has “generated uncertainty regarding the manner in which developers must proceed for the coexistence of projects that overlap between them”.
While some dispersed regulations exist in connection with the execution of operational agreement for hydrocarbons exploration and production contracts that overlap with mining titles, this Resolution would be the first integral regulation of coexistence between project of the sector, a situation which implies additional complexities given the public utility and social interest nature of the mining, hydrocarbon and electric industries.
One of the central elements of the new regulation will compromise the consolidation, for public consultation purposes, of the updated information currently held by public entities of the sector in National Information System of Projects of the Mining and Energy Sector to be administered by the MME or a designated entity. This database will include precise geographical information that allows for the identification of potential overlaps between project areas.
Therefore, before the execution of any contract for the exploration or exploitation of hydrocarbons or mineral, the National Hydrocarbons Agency (the “ANH”) and the National Mining Agency (the “ANM”), respectively, shall verify if the areas that are to be awarded overlap with areas of other projects of the sector. The Resolution also requires that the ANH and the ANM include in such contracts clauses to bind the contractor to take measures that facilitate coexistence with other projects in case of overlap.
For the case of the electricity sector, the Mining and Energy Planning Unit (“UPME”) shall require, for the registration of a project in phase one, delivery of the communications that allow for identification of potential overlaps with other projects of the sector. For phase two, it shall require the delivery of Coexistence Operational Agreement, with the characteristics set forth below. For transmission projects, all participants must deliver with their proposals a commitment that binds them to facilitate coexistence with other projects. The same shall be required for grid operators that purport to develop expansions of their own system.
The Coexistence Operational Agreement must define the responsibilities of environmental, technical and security aspects of the overlapped projects, and must include, at a minimum: (i) aspects of technical operations security, identifying emergency plans and procedures to initiate the activities of each project; (ii) the adoption of environmental management measures; (iii) responsibilities in respect to groups and ethnic communities and (iv) dispute resolution mechanisms.
The new regulation contains a procedure for the direct negotiation of this Agreements. According to the proposal, this process shall follow the following steps:
- The developer that notices the overlap shall inform such situation to the competent authority (ANH. ANM, UPME), with the purpose of requesting its participation within the negotiation process.
- In parallel, it shall communicate with the developer of the overlapped project informing her on the overlap and stating its intention to reach an agreement.
- Within thirty (30) days an initial meeting shall be convened. In case of refusal from either party, the developer may request the involved authorities to officially call the meeting.
- Once the parties have met for a first time, the direct negotiation stage must not extend longer than one hundred and twenty (120) business days, with an extension of further sixty (60) days. During this stage the parties shall prepare a technical minute that must be annexed to the Coexistence Operational Agreement.
- Once an agreement is reached, it shall be forwarded to the competent authorities, for informational effects.
In case negotiations fail, the parties shall execute a final negotiation minute that must be forwarded to the competent authorities. Once sent, the developer may resort to dispute resolution mechanisms agreed by them in the final negotiation minute.
The MME will receive comments on the project resolution until July 29. These comments must be sent (in Spanish) to the email address pciudadana@minenergia.gov.co in the form for comment reception set forth by MME in this link: https://www.minenergia.gov.co/es/servicio-al-ciudadano/foros/lineamientos-para-facilitar-la-coexistencia-de-proyectos-ante-eventuales-casos-de-superposiciones-parciales-o-totales/
Should you require further information, do not hesitate to contact us.
Álvaro José Rodríguez
alvaro.rodriguez@phrlegal.com
Mariana Sánchez
mariana.sanchez@phrlegal.com
Erika Serrano
erika.serrano@phrlegal.com
