The Colombian Government opened for public comments two draft resolutions to revamp the method for calculating the Producer Income Tax (PI) for fuel ethanol and biodiesel. The initiative, announced in Bogotá on October 1, 2025, is being promoted by the Ministries of Finance and Mines and Energy.
The central purpose is to align domestic prices with international references by adopting the parity price, incorporating logistics and tariff costs; this seeks to reduce distortions, improve competitiveness, and contain the fiscal pressure on the Fuel Price Stabilization Fund (FEPC).
Proposed changes for fuel ethanol
Until now, the IP of ethanol was calculated from the value of sugar as a raw material. According to the Executive, this approach ceased to represent the global dynamics and opened a gap with respect to import parity, especially with regard to corn ethanol from the United States.
With the update, the calculation would be based on the ethanol parity price in reference markets, to which would be added the costs of transportation, insurance, and applicable tariffs. The official expectation is that the IP will approach international levels and limit opportunities for arbitrage or speculative imports.
Planned adjustments for biodiesel
In biodiesel, the current methodology is based on the crude palm oil As a reference, the government proposes moving toward an import parity system, again with adjustments for logistics and tariffs, so that the value recognized to the producer better reflects external prices. The global push for biodiesel also conditions these decisions.
The approach seeks to give clear and predictable market signals for the supply chain, while correcting internal imbalances that have accumulated over the years. Biodiesel pricing is a key element in that transparency.
Calendar, participation and working table
The normative texts will be available for comments during 15 working daysAuthorities will convene a working group on October 14, with the participation of the Ministries of Mines and Energy, Finance, Agriculture, and Environment, to review contributions and agree on a methodology based on actual production costs.
The Minister of Mines and Energy, Edwin Palma, stressed that the reform aims to balance the market, protect consumers' pockets and strengthen the sector's competitiveness, insisting that dialogue with guilds, unions, and other stakeholders will be crucial.
Motivations and expected effects
After more than two decades with a scheme anchored to specific raw materials, the review aims greater transparency in price formation and a convergence with international references that reduces pressure on the FEPC.
In the case of ethanol, the gap compared to imported products—such as corn ethanol with subsidies in its country of origin—has amplified the difference with import parity; the redesign of the IP aims to close that gap.
In practical terms, the change does not eliminate domestic production or its role in the fuel mix, but rather redefines how its price is recognized so that it corresponds to more open conditions of competition and comparable.
With this regulatory package, the Executive intends update an outdated pricing architecture, organize the market and align it with the international environment, while gathering feedback and building consensus before final adoption.
