For many years now, Colombia has had a reputation as being among the countries most friendly to foreign investment. This year’s ‘Doing Business’ from the World Bank survey ranked the South American country as the second best business environment in Latin America after Mexico for ease of doing business. 

According to the Banco de la República, Colombia’s central bank, FDI in the country has increased more than 500% in the past 15 years, with a robust oil and mining sector leading the way. Colombia’s foreign trade quintupled in the past decade to reach $75bn in 2016, and Colombia’s infrastructure programme is currently the largest in Latin America, worth about $5.5bn. Last year, the country’s energy sector netted $3.6bn.


Even Colombia’s fractious politics have turned the corner. Despite a proposed peace deal with the left-wing Colombian rebels of the Fuerzas Armadas Revolucionarias de Colombia (FARC) being narrowly rejected by voters in autumn 2016, a gradual disarmament is still underway, giving many hope that the most seemingly intractable aspect of the country’s decades-long civil war might soon be over.

All of this has made Colombia a naturally attractive destination for Spain’s giant Barcelona-based Gas Natural Fenosa, a natural gas utilities company. When Gas Natural created Electricaribe to serve 2.5 million customers in Colombia’s Caribbean region, which encompasses seven departments (including the booming port of Barranquilla and the remote region of La Guajira, where electricity supply is notoriously unreliable), it did so as a venture with 85% owned by Gas Natural Fenosa and 15% owned by the Colombian government. 

Things did not go as planned, however. After Electricaribe went months providing what many viewed as a sub-par service and totted up total liabilities of nearly $800m (which the company said was largely due to delinquent payments and illegal siphoning of electricity), the Colombian government seized the company, entrusted its promised provision of electricity to the Superintendencia de Servicios Públicos Domiciliarios, a state regulator, and ordered the liquidation of its assets in March.

Gas Natural responded by suing the Colombian government at the United Nations Commission on International Trade Law (UNCITRAL) claiming the government owes it more that $1bn from the liquidation. The situation has caused such a rift that it even necessitated comment from Spain’s minister of foreign affairs, Alfonso Dastis, who in early April called on both parties to reach an agreement.

As the Electricaribe saga suggests, while Colombia remains full of opportunity for investment, the risks of the unforeseen hurdles of overextending are real. When Electricaribe threatened to stop paying power-generating companies last autumn – essentially threatening blackouts – the Colombian government was forced to act, and did so.

With Gas Natural still considering Colombia a strategic market, how the drama plays out over the coming months could be instructive for the future of energy-related FDI in the nation as a whole.