News | Economy | Culture | Opinion | Lifestyle | Science | Outdoors
Noticias | Opiniones | Calendar | Archive | Unclassified Ads | Home

Volume 14, Number 9
May 4 - 17, 2008


business & economy

Also in this section:
Companies asking for another electric rate hike, likely to get it
Mayday 2008: the state of Panama's labor movement
Business & Economy Briefs
Can Six Diamond adapt to local conditions and succeed in Bocas?
Flouting an ancient construction code in the mangroves of San Carlos
Previous Business & Economy Briefs


Rates range from 19¢ to 26¢ per kilowatt/hour, companies want 2¢ more
Electric rates probably going up
by Eric Jackson, largely from other media

On July 1 the semi-annual electric rate adjustments are due, and the power companies are asking the National Public Utilities Authority (ASEP, by its Spanish initials) for an increase of about two cents per kilowatt /hour. Present rates, at about 19¢ for most of Panama and 26¢ in Bocas, are already higher than in most countries. 

The great majority of the electricity used in this country is generated by hydroelectric dams but at peak usage hours thermal generators that burn coal, oil or gas make up the difference between what the dams produce and the country uses. Our government's policy has been to set the price of electricity roughly according to the price of oil, that is, to base rates on the costliest energy that we consume, even if most of Panama's electricity is produced far more cheaply.

According to reports in several national media it appears that the Torrijos administration will grant the increase, but that most residential electricity users, who use less than 500 kilowatt/hours of power per month, will receive a government subsidy and thus won't see the rate increase in their bills.

The subsidies ensure that Panama won't have electricity riots, but also aggravate other causes of public discontent and political problems for the government.

In 2007 subsidies for residential users amounted to $32.4 million and, depending on how one might care to figure, that was added to the national debt or deducted from the national operating budget. A better way to figure it might be in terms of broken sewers not fixed and bubbling smelly stuff onto the streets, broken up roads not promptly fixed and school buildings not maintained. However, because of the subsidies most people don't make such connections.

Because of the subsidy the general public isn't inclined to cause trouble for the government and to a certain point it becomes politically easy to approve increases to already high rates. However, businesses pay the full increases and tend to raise the prices of the goods and services they use. Grocery stores, because of the power they use for refrigeration, are among the most affected and if one has attended any FRENADESO marches of late and noticed the changing public responses one will notice that high food prices are becoming a hot button issue capable of causing labor militancy and public unrest.

There are relatively few Panamanians who own stakes in this country's power generation business if one doesn't count the government's pieces of that business. Other than utility company executives, people have or hope to have hydroelectric dam concessions and hardcore ideologues who never see a price gouge that they don't like, this country's business community strongly disapproves of the high electricity rate structure. It raises the costs of doing business and, for those living energy intensive personal lifestyles like most higher income Panamanians do, increases household expenses. That this segment of society might be annoyed makes little direct difference when the votes its members cast are counted, but the politicians generally depend on the donations of businesspeople to finance their campaigns and a shift in the business sector's opinions and contributions is normally part of the electoral syndrome that replaces a ruling party with an opposition government. Rate increases with elections less than a year away can't help the PRD's chances in 2009.

The big shift in raw votes that's likely to result from the Torrijos administration's energy policy may be seen in the Ngobe-Bugle Comarca, a destitute and swing-voting indigenous region that contains about eight or nine percent of the nation's population. Hydroelectric generating concessions have been applied for with respect to virtually every river in Panama and the ones that are being built are mostly in and around indigenous communities. As was the practice of his father, the dictator General Omar Torrijos, President Martín Torrijos follows a policy of forcible removal and inadequate token compensation for those displaced by hydroelectric dams. Villages that had long existed on fertile soils near rivers are being relocated to barren lands without convenient water supplies. Rural protests against hydroelectric projects, particularly by Ngobe communities that are threatened, have become a common feature of Panama's political scene in the past year or two. Within the comarcas the issue is aggravated because Panama's indigenous nations have never accepted the Panamanian government's claim of ownership of all water and mineral resources, including those in collectively owned indigenous areas.

In the most politically cohesive of the indigenous comarcas, Kuna Yala, another part of the Torrijos energy policy is meeting stiff resistance. The proposed electrical connection with the Colombian power grid would be via power lines to be built through the Atlantic side comarca, but in an April 30 letter to the state-owned ETESA power line company the Kuna General Congress noted that the 49 communities of Kuna Yala oppose the power line and warned that if anyone from ETESA or its contractors comes into the comarca to conduct an environmental impact study for the power line they will be expelled and their equipment will be confiscated.

The administration is going several steps beyond the hydroelectric projects now under construction by pushing Law 278, proposed legislation now before the National Assembly that would legalize 50-year private concessions over this country's surface and ground water resources. It's being touted as a response to a national energy crisis, and within other more selected circles as a tremendous opportunity to make money exporting electricity as Panama's power grids are connected to its Colombian and Central American counterparts. The more explosive reality will be manifested when communities lose their water supplies to private companies and are forced to move or pay high private water rates, but right now we are seeing a lot of road blocking protests against hydroelectric dams and that sort of chaos is likely to increase.

The indigenous and farmer communities that stand to be displaced by hydroelectric projects are being joined in various ways by environmentalist and consumer groups. A small consumer advocacy organization, Consumo Etico, was the first organization to oppose Law 278 in National Assembly hearings and one by one the nation's environmental organizations are also taking stands against water privatization. Most are limiting themselves to public statements or quiet lobbying, but a few of them are physically joining in the indigenous-led protests and some are using international connections to apply political pressures against multinational power generating companies in their countries of origin.

To blunt the effect of water privatization for hydroelectric generation, the Torrijos administration has proposed Law 405, legislation that would tax concessionaires and put the proceeds into a fund to develop affected communities. The hydroelectric industry association, the Panamanian Renewable Energy Producers Association (APPER) is vigorously opposing that move.

On May 2 the capital and much of the rest of the country saw heavy rainfall and other climatic indicators suggested that after an unusually prolonged dry season our rainy season has begun. That ought to begin the process of refilling the reservoirs behind the existing hydroelectric dams. That, in turn, could relieve an electricity crisis --- real or contrived --- that Panamanians have been seeing in recent months in the form of frequent brief power outages.

In late April the government also imposed restrictions on the use of most illuminated signs in Panama City as an electricity saving measure. Mostly these restrictions apply outside of peak electricity usage hours, but the changed appearance of the city skyline might help the Torrijos administration sell another rate increase to the public.


Also in this section:
Companies asking for another electric rate hike, likely to get it
Mayday 2008: the state of Panama's labor movement
Business & Economy Briefs
Can Six Diamond adapt to local conditions and succeed in Bocas?
Flouting an ancient construction code in the mangroves of San Carlos
Previous Business & Economy Briefs

News | Economy | Culture | Opinion | Lifestyle | Science | Outdoors
Noticias | Opiniones | Calendar | Archive | Unclassified Ads | Home

Make the Executive Hotel your headquarters in Panama City --- http://ww.executivehotel-panama.com
Find the boat of your dreams through Evermarine --- http://www.evermarine.com

 

© 2008 by Eric Jackson
All Rights Reserved - Todos Derechos Reservados
Individual contributors retain the rights to their articles or photos

email: editor@thepanamanews.com or

e_l_jackson_malo@yahoo.com

Cell phone: (507) 6-632-6343

Mailing address:
Eric Jackson
att'n The Panama News
Apartado 0831-00927 Estafeta Paitilla
Panamá, República de Panamá