Ecopetrol Investors Ratify New Directors Assessed to Be Unfit

(Bloomberg) -- Ecopetrol SA shareholders approved new board members despite an internal report that warned they lack the experience needed to oversee the company.

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In a meeting Friday, investors led by the Colombian government as majority owner, chose five new members for the board and re-elected four incumbents. Among the newly elected directors are an ex-union leader, two former senators and Deputy Environment Minister Lilia Tatiana Roa, whose LinkedIn profile describes her as “supporting community proposals to resist extractivism.”

The board overhaul at the state-controlled oil company comes as President Gustavo Petro pushes to move the South American economy away from fossil fuels. He has refused to sign new drilling licenses even with oil and coal accounting for about half of the nation’s exports. Ecopetrol is exploring for natural gas under existing contracts in Caribbean waters as Colombia grapples with a looming shortfall of the cooking and power-plant fuel.

Read More: Ecopetrol Weighs Options to Import Gas as Colombia Supply Drops

Ecopetrol shares have lost almost 10% this year, compared with an 11% gain for the country’s Colcap index.

Stacking the board with political appointees poses a risk to Ecopetrol as dwindling reserves undermine its future production outlook, according to Sergio Cabrales, a professor at Bogota’s Los Andes University.

“This is a key moment for the company because it wants to advance in energy transition but it can’t weaken its core business, which is oil and gas,” Cabrales said. “The board must be aware of Ecopetrol’s core business and allocate the necessary investments.”

The board controversy compounds concerns about Petro’s appointment of Ricardo Roa as Ecopetrol’s chief executive officer. Earlier this week, local media reported that an internal company study conducted by Control Risks found that probes into Roa’s management of Petro’s 2022 campaign create a risk for Ecopetrol.

A separate report released by Ecopetrol’s governance committee last week and seen by Bloomberg News showed that Edwin Palma, a deputy labor minister and former union head, may not have the required 12 years of professional experience to occupy a board seat.

Lilia Tatiana Roa and former Senator Angela Maria Robledo lack the necessary management and industry experience while Gabriel Garcia Realpe, a politician who backed Petro’s presidential campaign, has legislative expertise but no comparable business-management background, the committee found.

Meanwhile, Alvaro Torres, who will represent the oil-producing provinces and is close to CEO Roa, may lack the required financial expertise, the report said.

The incumbent directors set to retain their seats are Juan Jose Echavarria, Monica de Greiff, Gonzalo Hernandez and Luis Alberto Zuleta.

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