Compressed Natural Gas for Vehicles

The origins of the natural gas industry in Colombia can be dated to approximately 17 years ago, when it was concentrated in certain cities along the Atlantic coast such as Barranquilla and Cartagena. However, its implementation in the country's interior didn't start until 2000, when three service stations were established and, by the end of the year, 100.000 vehicles had been converted.

As one of its policies, the Ministry of Mines and Energy has promoted the development of a program for adopting natural gas as an alternative fuel for vehicles, seeking to replace liquid fuels such as gasoline and motor fuel oil (ACPM), which are more expensive and environmentally damaging. In this manner, the initial goal of the National Development Plan for 2006-2010 was to achieve a total of 40.000 natural gas vehicles during the next four year period.

In order to accomplish this goal, Law 788 of 2002 (Tax Reform) included a VAT (IVA) exemption for the purchase of parts and equipment for gas service stations as well as gas vehicle conversion kits. At the same time, the gradual dismantling of subsidies for those liquid fuels that function as substitutes for natural gas (gasoline and ACPM) will necessarily result in periodic increases in the price of these fuels during the short and medium term, thus demonstrating the greater competitiveness of natural gas. But reality has surpassed all expectations and the four year period ended with an approximate total of 115.000 converted vehicles.

For the sake of standardizing the optimal operation of the GNV (natural gas for vehicles) industry, the Ministry of Mines and Energy issued Resolution 8 0582 of 1996, which indicated what characteristics must be taken into account for the design, construction, installation, and maintenance of a service station (EDS) or a conversion workshop. . But the industry's growth and the need to carry out a better oversight of its activities made the partial modification of Resolution 80582 a necessity, leading the Ministry of Mines and Energy to issue Decree 1605 on July 31st, 2002, in which the Superintendence of Industry and Commerce was assigned the task of controlling the industry's activities and maintaining them under surveillance.

Additionally, the same Decree established that Service Stations and Conversion Workshops have the obligation of obtaining and maintaining a valid certificate of compliance issued by an officially recognized certification agency, in addition to meeting the requirements for acquiring municipal authorizations as well as insurance policies covering civil liability and compliance.

Therefore, the accelerated growth of this sector in Colombia, ranked in the top ten countries worldwide according to the number of conversions made over the past ten years, proves that both the National Government and private enterprises have promoted its development as well as generated credibility among the general public.

Tax Incentives for the GNCV Industry.

The National Government issued Decree 4570 of December 12th of 2005, which partially modified Customs Tariffs, authorized changes to the customs nomenclature, descriptions and customs duties for certain subheadings related to the Natural Gas for Vehicles industry.