Drinking water supply and sanitation
Electricity
Water transport
The Government of Panama's economic policy places increased emphasis on social policies and measures to promote private sector participation in infrastructure and other sectors. There is a major programme of divestment of public utilities. Parts of the Instituto de Recursos Hidráulicos y Electrificación (IRHE), the state-owned electricity monopoly, are expected to be sold in the near future, the electricity sector has been opened to private participation, and the rapid privatization of several areas of the Instituto de Acueductos y Alcantarillados Nacionales (IDAAN), the water monopoly, has been announced. A law to allow the sale of both companies is expected in the first half of 1997.
The Ministerio de Planificación y Política Económica (MIPPE) advises the government regarding economic and social policies and provides assistance in the process of restructuring and privatization of public enterprises. The Unidad Coordinadora para el Proceso de Privatización (ProPrivat) of the Ministerio de Hacienda y Tesoro was created by Law þ 16 of 14 July 1992 to facilitate the privatization programme and to oversee the sale of government assets.
Law þ 26 of 29 January 1996 created the Ente Regulador de los Servicios Públicos (ERSP), a regulatory agency for public services, including drinking water supply and electricity. The agency will have a three member board - þJunta Directivaþ - whose members are named by the President and ratified by the Legislative Assembly, and have the responsibility to promote competition in the provision of public utility services and to prevent abuse of monopoly power. Its main duties and powers include granting and revoking concession, licences and authorizations; monitoring the correct provision of public services and compliance with technical, commercial, legal and environmental requirements; monitoring compliance with service quality, expansion and maintenance obligations; defining efficiency criteria for the evaluation of public utilities; and regulating tariffs.
| ESTIMATED COVERAGE |
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| Drinking water supply coverage in urban areas reaches almost 100 per cent and the water supplied is generally of high quality. The level of coverage in lower in rural areas - about 66 per cent - and some systems supply water of doubful quality. Water losses are high amounting to 46 per cent in urban systems. About 84 per cent of the dwellings has sewerage connections, individual septic tanks or latrines. There is virtually no sewage treatment. |
The Instituto de Acueductos y Alcantarillados Nacionales (IDAAN) is responsible for all aspects of drinking water supply and sewerage administration. Several other agencies, including the Ministerio de Salud and the Fondo de Emergencia Social (FES), play an important role in financing and executing drinking water supply and sanitation projects, particularly in rural areas.
The government has decided to encourage private sector participation in the provision of drinking water supply and sanitation services, and in 1995, announced its intention to privatize several areas of IDAAN. It is expected that the sector will be reformed. The proposal provides for the separation of the institutional roles in the sector, a new high-level entity under the Ministerio de Salud (MINSA) would be responsible for policy setting, ERSP for regulation, while service provision would be opened to the private sector, through the creation of a mixed capital company for Panama City, to be formed through the corporatization of IDAAN, and concessions in other cities.
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Net installed capacity in 1994 (MW):
Percentage of population with residential connections in 1989...........58 |
The Instituto de Recursos Hidráulicos y Electrificación (IRHE) has operated as a vertically integrated monopoly for generation, transmission and distribution since 1972 when the Compañía Panameña de Fuerza y Luz which had been responsible for transmission and distribution in the principal urban areas was nationalized.
The IRHE operates under the Ministerio de Comercio e Industrias and is directed by a Board (Junta) of seven Directors, whose President is the Minister. The Board is responsible for the administrative, financial and operational management of the IRHE, as well as for expansion plans. The Comisión Nacional de Energía (CONADE) is responsible for national energy policy.
The IRHE needs to increase its installed generation capacity. Proposed strategies include investments in new plants, greater efficiency savings, conservation, improved plant maintenance, and purchasing excess supply from private sources and from abroad. The IRHE already buys excess energy from one private company and from the Panama Canal Commission (PCC). A contract has been awarded to build a thermal power plant and other contracts are expected to be negotiated in the future.
The government has announced plans for the privatization of the IRHE and its parts are expected to be sold in the near future. As the first step, it has been proposed to allow private investors to generate and sell electricity by building new power stations. Law þ 6 of February 1995 ended the IRHE's monopoly and allowed private companies to generate electric energy for self consumption or for sale to third parties. Private sector participation in electricity generation is limited to 45 per cent of the country's installed capacity; there is a further limitation of a maximum of 20 per cent of the national installed capacity for any individual project or company participating in private generation. The law calls for preference to be given to companies which will generate electricity from renewable sources, including hydropower. It also specifies that companies winning generation licenses must reinvest a minimum of 5 per cent of their profits in the communities around their new plant. Distribution can be either through the IRHE's network or through the new private networks.
Further reforms are being considered. The proposed reformed provide for the separation of the institutional roles in the sector; the promotion of competition in generation and sales to large consumers; privates sector participation in all activities, with the exception of transmission, through concessions, licences and participation in the capital of existing companies; the separation of generation, transmission and distribution; the creation of various companies, including one transmission company, to replace IRHE; and a transitional five year period, after which the electricity market would be deregulated and expansion planning would be indicative.
Panama has geothermal resources of some magnitude and has received a grant from the IDB for feasibility studies on projects to be developed by the private sector.
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| Inland waterways: 82 km Panama Canal; and 800 km navigable by shallow draft vessels. |
Panama is scheduled to take over the management of the Panama Canal on December 31, 1999. Privatization of the operations of the Canal has so far been ruled out, but there could be opportunities for service contracts for at least some of the day-to-day operation and maintenance functions.
A possible first step in this direction, was the adoption in November 1994 of a law creating the Panama Canal Authority, an administrative agency that will take charge of the Panama Canal. The agency is expected to enjoy a wide authority and autonomy, including setting tolls and operating with funds separate from the rest of the public budget.
In a another important development, in 1996, the government awarded management contracts for the two ports - the Balboa port on the Pacific side and the Cristóbal port on the Caribbean side - of the Panama Canal, for 20 years, and the concession to run the trans-isthmus railway.
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