Citing an absence of judicial security, Hydro Quebec has suspended its investments in the development of the Fortuna Dam and hydroelectric plant. The company, which is a public utility owned by the Canadian province (or North American nation if you're a Quebecois nationalist) of Quebec, has private investments in various places and acquired 49 percent and effective control of the Fortuna project as part of the privatization of the old IRHE electric company. Hydro Quebec's complaint is that Panama's Public Services Regulating Entity has unilaterally changed the terms of the 1999 contact by which the company bought into the Fortuna project, by issuing a regulation that prevents power generating firms from signing contracts with distribution companies for terms of longer than two years. This, Hydro Quebec complains, makes it hard for them to get bank financing.

On October 3 President Moscoso did the ribbon-cutting honors on a new generator at the Bayano Dam in eastern Panama province, and took the occasion to call on the Public Services Regulating Board to adjust electricity rates downward in keeping with the increased supply. The new 86-megawatt generator is part of a $40 million upgrade to the Bayano power plant, controlling interest in which was aquired by AES as part of the privatization of the old IRHE electric utility. Another 24-megawatt generator is to be installed at Bayano next year.

The Panama Canal Authority says that it collected some $588 million in tolls during the fiscal year that ended on September 30, down slightly from the year before. The overall tonnage of ships transiting the Panama Canal was down by just over five percent, with the decline offset by increased business from cruise ships. Part of the decline in tonnage is due to competition from post-Panamax container ships, which are too large to use the Panama Canal. A weak global economy that has heavily affected South American countries that are major canal users is also a part of the equation. About four percent of the world's maritime shipping passes through the canal.

A dredging project to increase the amount of water that Gatun Lake holds and to deepen its shipping channel was completed in September. The Panama Canal Authority also finished the installation of energy-saving hydraulic mechanisms to open and close the gates at the Gatun Locks. The works were part of a $1.5 billion canal modernization program that has been underway since 1997.

Panama Ports, a local subsidiary of Hong Kong-based Hutchison Whampoa, is making extensive additions and improvements to the Port of Balboa, and for a moment it appeared that the work would drive up the price of bread in Panama. The problem was that Pier 14 is the only place equipped to accomodate large grain carriers and the company wanted to shift grain handling to Pier 6, which isn't big enough to handle the larger ships. This would have meant offloading wheat, corn, soybeans and sorghum onto lighters, then unloading the food and fodder at Pier 6, significantly increasing costs and thus the prices of materials used to make bread and feed farm animals. After a storm of complaints, the company decided to alter its work schedule to avoid imposing this hardship and cost on the nation's grain importers.

President Moscoso's controversial "equalization" policy that gave Hutchison Whampoa a billion-dollar rent and tax break, which withstood one challenge before the Supreme Court, may face another. The magistrates on the Arnulfista-dominated high court rejected a lawsuit by legislators, who argued that such a modification of a contract that was passed by the Legislative Assembly needed legislative approval. Now Alma Montenegro de Fletcher, the nation's Administrative Prosecutor, has issued an opinion that if the court upheld equalization on the basis that legislatively approved contracts with the private port facilities provide that if one gets a subsidy or tax break, others must also receive it, then those contracts are unconstitutional because they purport to waive Article 153, Section 15 of the Constitution, which establishes the government's right to enter into contracts as it sees fit. The administrative prosecutor's opinion is not binding, but could provide the basis for further court challenges.

On September 29 President Moscoso went to the semi-autonomous indigenous Ngobe-Bugle Comarca to inaugurate a system of 86 rural aqueducts that will serve 103 villages around Tole. "I don't come as a tourist," the president said, adding that her administration intends to do more for Panama's impoverished indigenous communities.

Divala, a community in the Ngobe-Bugle Comarca whose poverty and nearly universal child malnutrition has captured national attention, is getting a new nutritional assistance center. The Patronato de Nutricion, which runs feeding programs for children and pregnant women and sustainable farming projects for impoverished communities, raised the money for the project during a telethon on RPC-TV.

Businessman and presidential hopeful Alberto Vallarino experienced an economic setback with the Fitch international bond rating service's recent downgrade of the prospects of his flagship Primer Banco del Istmo (Banistmo) to "negative." Fitch maintained Banistmo's bond rating at BB+, however. The reasons for the negative perspective were the increased risk taken on in Banistmo's series of expansions (for example by taking on a lot of bad loans in last April's acquisition of Bancolat), and a fall in profitability. Vallarino attributes the downgrade to a weak international economy, and notes that Banistmo's capital reserves are well above required levels and growing. Were the entire Panamanian economy not in the doldrums, Vallarino's business woes --- not only at Banistmo but also at the Hotel Bristol, which had to restructure its debt on the eve of a default --- might be a political issue. However, his banks have been more understanding than most others with hard-pressed borrowers and polls showing him running about even with the PRD's Mart’n Torrijos in public preferences to become Panama's next president.

Though mergers, acquisitions, downsizings and the departures of money laundering specialists have been reducing the number of Panama City banks lately, in January we will be getting a new bank here. The Banco Cuscatlan Panama plans to open for business then.

The PRD may be boycotting and the labor movement has dissented from previous agreements, but the Moscoso administration is moving ahead with its plans to renew a national economic dialogue and take up the knotty problem of taxation. The government's agreements with the International Monetary Fund specify that Panama must reform its tax system, but opposition from both within and outside of Mireya's governing coalition has prevented any progress in this field. The fundamental obstacles are that the wealthy people who dominate Panamanian political life don't pay much in taxes and don't want that to change, while an attempt to raise taxes on lower-income people while preserving the privileges of the rich would probably provoke rioting in the streets. However, if the alliance that put Mireya's faction back into control of the Legislative Assembly can hold together, it is possible that an unpopular tax reform could be passed. The administration's package of proposals includes a increase in the minimum annual income to be subject to income taxation from $3,900 to $10,400; making expense accounts ("gastos de representaci—n") subject to income tax; an extra luxury tax on tobacco, alcohol, cell phone services and some imported food products; extension of the sales tax (IBTM) to certain services that are now excluded; and a minimum corporate tax. Analysts at Credit Suisse/First Boston estimate that if passed, the package would add up to about $100 million in additional annual revenue for the national government. There are likely to be some fierce arguments before any such tax plan is passed, and for its approval by the legislature many deputies would surely send their suplentes to cast the vote, so that their support for higher taxes could be denied during the 2004 campaign.

The Health Ministry, armed with a loan from the Inter-American Development Bank and a grant from the US government, has deemed 20 companies qualified to bid for the contract to design a new sanitary sewer network for the Panama City-San Miguelito metro area. Engineering firms and consortia from Panama, the United States, Canada, Germany, France, Israel, Brazil, Bolivia and Argentina are among those that may bid. This would be just to design sewers. The huge, multi-phased actual construction of such a network would be another job, as would be the design and construction of the sewage treatment system that would be needed to clean Panama Bay. The need for a modern sanitary sewer system has been well known for years but momentary political demands --- like the current administration's reluctance to see Panama Bay cleaned with a PRD mayor in office in Panama City, and the prior PRD administration's similar reluctance to see such an urban improvement with the anti-PRD May’n Correa running the city --- have always obstructed progress. Given current budget realities and governmental priorities, it would be a surprise to see groundbreaking on a new sewer system during the Moscoso administration.

The Cable & Wireless monopolies on international, long-distance and fixed local phone services are set to end with this year, but for many Panamanians there will still be no alternatives. The Public Services Regulating Board has approved the applications of 24 new companies that want to enter the market, but most of them only want to offer international, long distance or data services, and only to the lucrative Panama City banking district or Colon Free Zone markets. Only five companies plan to offer local home telephone service that competes with Cable & Wireless, with none of them in a position to compete across the nation when the monopoly ends. Cable & Wireless's delaying tactics in negotiating agreements that would allow other companies to connect to the system they control will also put off the onset of serious competition. In Panama City the first competitor for local phone service is likely to be MEDCOM, whose CableOnda cable television and Internet service system already has much of the city wired with fiber optic cables that can handle phone services as well as the present telecommunications uses.

In recent days representatives of MEDCOM's CableOnda cable TV network and police officers have been making the rounds on the streets around The Panama News office in Perejil, cutting pirate cable connections and issuing citations for those who enjoy illegal cable service to appear in court about it. MEDCOM, like all other businesses whose income in part derives from ad sales, has an interest in being able to claim higher numbers of viewers. However, it loses a lot of money to people who are receiving its signals but not paying, and a lot of those illegal connections are due to internal corruption. Not only have there been MEDCOM technicians willing to connect people's homes to cable for a personal payment that's less than the cost of legally subscribing to the service, but sometimes when people who have cutoff orders pending pay their bills in cash things are so arranged that Cable Onda's records indicate that service was cut when it was not, and the payment is not registered, except possibly in a MEDCOM employee's wallet. Thus one of the first questions that the police and CableOnda people ask of signal pirates whom they catch is who installed their cable service.

CA Beverages Inc., a consortium led by the Dutch Heineken brewery and including Panamerican Beverages Inc., a Panamanian company, and Florida Ice & Fan Co. SA, a Costa Rican corporation, has bought a controlling interest in Coca-Cola de PanamaCompa–’a Embotelladora SA for $138 million and with it indirect control of Cerveceria Baru, the brewery that makes Soberana and other beer products. Now the consortium is offering the minority shareholders of both Coca-Cola de Panama and Cerveceria Baru the same price per share as it paid to JJ Vallarino and his partners for their controlling interest.

Were it not for the voters' verdict in 1999, the buyout of Coca-Cola de Panama and Cerveceria Baru would have had a significant political repercussion. JJ Vallarino, long a favorite when US economic aid and loan guarantees were being passed out, left the Partido Laborista (PALA) that was headed by Manuel Antonio Noriega's brother-in-law shortly before the December 1989 invasion and formed his own party, the National Renovation Movement or MORENA, which took on Cerveza Soberana's colors in its party emblem. MORENA was in the forefront of a 1994 smear campaign that alleged that entertainer and then presidential candidate RubZ&Mac255;n Blades was linked to the former dictatorship and Castro's Cuba. One MORENA candidate, current Vice-Minister of Canal Affairs Leo Gonz‡lez, produced documents "proving" Fidel's support for Blades and the PRD, which turned out to be forgeries. In 1999 MORENA backed President Moscoso's candidacy and one of its members, Dominador Kaiser Bazan, was one of her running mates. Though Mireya won and MORENA people were rewarded with a share of the government posts, JJ Vallarino's party didn't get enough votes to maintain its ballot status and most of its members joined the Arnulfistas. The other political party based on a beer brewing fortune, Solidaridad, still has ballot status and three members in the Legislative Assembly, but founder and 1994 presidential candidate Samuel Lewis Galindo resigned from the party leadership several years ago and has sold his interest in Cerveceria Nacional, brewer of Cerveza Balboa and other brands, to a Colombian-led consortium.

For health reasons, but also as a part of the Casco Viejo's gentrification, the seafood vendors at the old city's Terraplen are about to be forced out. The city is building new vendor stalls at the Muelle Ingles next to the Municipal Seafood Market, which will be cheaper to rent than the vendors' current premises and equipped with sinks and sanitary facilities that the Terraplen is not. When those are ready, the city and the Health Ministry plan to dislodge the seafood vendors from the Terraplen, where they have done business for many years.

Having heard from both the Panama Oeste bus drivers who blocked the Pan-American Highway to protest against illegal competition and residents of Arraijan, La Chorrera and Capira who complain that the legally licensed bus routes provide inadequate service to the fast-growing area, President Moscoso said that the Transportation Authority must grant new bus permits to serve unmet needs. About 100,000 people commute over the Bridge of the Americas and back between Panama Oeste bedroom communities and jobs in the capital every day.

© 2002 by The Panama News All Rights Reserved - Todos Derechos Reservados Individual contributors retain the rights to their articles or photos For information or problems with this page contact: editor@ThePanamaNews.com
News Business Editorial Opinion Letters Arts Reviews Community Fun Travel Galleries Calendar Outdoors Dining Science Sports Español Front Page Archive also in this section: Roadbuilding in Balboa