The Environmental Compensation Fund (Fondo de Compensación Ambiental - FCA) is a financial instrument used for the redistribution of resources among Corporations, with benefits for those less likely to generate resources, including the Sustainable Development Corporations.
This Fund was created as an account attached to the Ministry of the Environment, Housing and Territorial Development and, therefore, its management is subject to the Organic Budget Law.
Regulatory Framework
- Agreement 03/05 modified the allocation of operating resources to Corporations other than the 15 with the least resources, and it changed the procedure for modifying the Operating Plans for approved projects.
- Agreement 02/05 established the Fund''s Operating Regulations.
- Decree 954/99 regulated the Fund''s operations and administration.
- Law 344/96 (Art. 24) created the Fund as an account of the Nation, without legal standing, and attached to the MAVDT.
Operating Structure
The Fund Committee
The decision-making authority of the Environmental Compensation Fund is a Committee that is made up by:
Two representatives of the Ministry of the Environment, Housing and Territorial Development (the Minister or Vice Minister of the Environment and the Director of Planning, Information and Regional Coordination preside).
- One representative of the Directorate of Urban Development and Environmental Policy of the National Planning Department.
- One representative of the Regional Autonomous Corporations.
- One representative of the Sustainable Development Corporations.
Functions of the Fund Committee. Article 4 of Decree 954
- To design and approve the operating regulations of the Environmental Compensation Fund, to which the Committee itself will be subject.
- To prepare and present to the national government a proposal for the annual distribution of the Fund''s resources to finance the operating, investment and debt service budgets.
- To determine the distribution of Environmental Compensation Fund resources among the benefited Corporations. This allocation of resources will be made through a Distribution Resolution of the Ministry of the Environment.
- To evaluate the administration of the resources distributed by the Environmental Compensation Fund to the Corporations, in accordance with the monitoring parameters established in the operating regulations.
- To ensure that the Corporations make contributions to the Environmental Compensation Fund, in accordance with the percentages established in Law 344 of 1996 and on the dates established in Decree 954 of 1999 and the operating regulations.
Office of the Technical Secretary
The FCA Committee''s Office of the Technical Secretary provides administrative and technical support for the Fund''s different administrative activities. This Office is directed by the MAVDT''s Directorate of Planning, Information and Regional Coordination.
Functions of the Office of the Technical Secretary. Article 5 of Decree 954.
- To perform technical analyses and studies which support the Committee of the Environmental Compensation Fund in preparing its proposal for the annual distribution of resources.
- To make recommendations to the Committee of the Environmental Compensation Fund on how to distribute the collected resources among the benefited Corporations, in accordance with the criteria established in Decree 954 of 1999.
- To receive and evaluate the allocation requests submitted by the Corporations.
- To periodically review and inform the Committee about the status of Fund collections and compliance with the obligations of the Corporations.
- To monitor the administration of the resources allocated by the Fund, in accordance with the operating regulations.
- To provide administrative support and to function as the Secretary of the Committee.
Fund Revenues
The Fund''s revenues come from transfers by the Regional Autonomous Corporations, corresponding to 20% of the revenues received from transfers from the electric sector, and 10% of the rest of the Corporations'' income, excluding the environmental percentage of the assessments on real property and those derived from inter-administrative contractual relationships.
Contributing Corporations
All Regional Autonomous Corporations are contributors, with the exception of the Sustainable Development Corporations.
Beneficiary Corporations
Pursuant to the operating regulations, the beneficiaries of Environmental Compensation Fund resources are the 15 Corporations with the smallest total current budgets, including the 7 Sustainable Development Corporations (CDA, Corpoamazonia, Corpomojana, Corpouraba, Coralina, Codechoco, and Cormacarena).
Use of the Resources
The resources of the Environmental Compensation Fund are used to finance the Corporations'' operating, investment and debt service expenses, with priority given to investment expenses.
Resource Allocation Procedure
In order to determine the beneficiary Corporations, the Office of the Technical Secretary requests information from all of the Corporations about their current budgets.
Operating Expenses
The beneficiary Corporations submit their requests with technical justifications for the deficits in their personnel expense, general expense or transfer accounts. The analysis and determination of the available allocation shares are coordinated with the Ministry of Finance, in accordance with Law 617 of 2000 and Legislative Act 01 of 2001.
- The Office of the Technical Secretary evaluates the requests and presents them to the Committee
- The Committee allocates the resources as it deems appropriate
- The Distribution Resolution is prepared and processed
Monitoring the Allocations
The Office of the Technical Secretary, with the support of the Ministry''s technical departments, conducts the technical and administrative monitoring of the operating allocations and investment projects financed with Fund resources. It also makes random monitoring visits to projects. The monitoring is performed mainly on the basis of the quarterly resource administration progress reports prepared by the Corporations.
The presentation of the reports within the periods established in the Fund''s Methodological Guide is one criterion used for determining the allocation of resources to the beneficiary Corporations.