Privatization and electric rate hikes race through the legislature

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sticke em up
Wait a minute — “reputed?” Isn’t a newspaper supposed to avoid rumors? That will be the blowoff. The proposal is undergoing changes in committee and even the ETESA employees and most members of the National Assembly are not privy to that information. Plus, the draft proposal that was published implies vast changes that are not spelled out within. The legislative session ends in four days.

ETESA privatization, a rate shift
from big users to the rest of us

by Eric Jackson

We want to create a market dynamizer that is able to fill the gap that the market has, because today all generators are marketers. Today, each of the licensees and / or concessions of any technology are able to serve the market of large customers. What we are saying is that since these companies come from a long-term conception of assets, and they have clients and are into very large investments, they do not take the risk of clients who do not have risk rating or who offer a greater risk than a distributor that has a risk and benefits rating. The generator as a marketer has not filled the gap that exists to be able to serve large customers, of which 16 qualify.

ETESA director Gilberto Ferrari
to La Estrella’s Adelita Coriat
when asked about rates going up

 

No, they won’t let us see the details as are now before the legislature. They did publish a cryptic 17-page draft on October 10, but the horse trading is ongoing in the Commerce and Economic Affairs Committee and that we can’t see.

Many of us have suffered recent losses in the power surges and power outages. Historically those have been contrived in such times, with a design to create a “public demand” for action. That one was pulled a few years back to jam through hydroelectric dam concessions that privatized the water in most of the rivers is Chiriqui province and not long after to tear the Tabasara River from the Ngabe-Bugle Comarca by way of the Barro Blanco Dam.

Almost everywhere that public electric companies have been privatized, the industry has been broken up so that profitable power generation and profitable retail power sales get auctioned off, while the unprofitable power lines business stays in public hands. So it was in the late 90s when the Pérez Balladares administration, at the urging of international lenders and in conformance with the “Washington Consensus” of how US power elites thought that the world should be run, privatized the old state-owned IRHE electric utility. Private companies got chunks of the rest of the business, but the lines remained state property managed by the state-owned ETESA power line company.

Now, notwithstanding all of the glowing reports of a Panamanian economic miracle, the Panamanian government is deeply in debt and the same international financial institutions, talking the tattered remnant of the Washington Consensus doctrine, are demanding the sale of public assets, cuts in government spending on things like health and education, lower costs and taxes for big business and higher costs and taxes for everyone else.

Thus Proposed Law 573. The National Assembly says on its website that it “modifies and adds articles to the unique text of Law 6 of February 3, 1997.” ETESA director Gilberto Ferrari describes it as a “consensus” arrived among “business associations, the National Public Services Authority, the Secretariat, the Executive and some legislators with whom we have spoken.” Does Panama’s historically most diligent and most intelligent business group, the Panamanian Business Executives Association, object to a largely undisclosed piece of major economic legislation being passed in the last minute rush of the end of a legislative session? Ferrari dismisses them as part of the problem.

Things have been leaking out in the press, certain things may be discerned from the draft and then there was a remarkable interview that Ferrari gave with La Estrella’s Adelita Coriat. For example, there is the persistent rumor, not spelled out in the draft proposal, that the government will rid itself of the losses that were always intended when ETESA was created and get some $511 million from an undisclosed somebody. (There are rumors about who that somebody is, but none persistent or compelling enough to report.) But if the ETESA director complains that the utility is consistently losing money and suggests that under a new system in the making that will not be the case, he’s talking about for-profit or at least unsubsidized power lines, is he not? If he explains that the big users’ needs are not being met, he’s suggesting that they will be, and someone whom he won’t specify will have to cover the cost.

Ferrari explains and the draft suggests that the 16 biggest electricity users will be able to make private deals with designated generating companies. The draft specifies that a new class of players — comercializadores or brokers, will be created to take their cut of deal-making between large users and generating companies.

Implicit, but not expressly admitted, is that the big companies, via the new brokers, will use newly for-profit old power lines to guarantee their power at prices they are willing to pay. What will never be admitted but mathematically must be the case is that everyone else will be a “loser,” a pendejo who will have to cover the savings of the 16 companies, the income of a new broker class and the profit margin of a private power line management that will demand all of the status, salary and perks of that position in society.

When will we know the details? After the deal is done? Who gets paid to get the deal done? We can only imagine.

 

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