Panama Business & Economy Briefs

Business & Economy Briefs

Tuna industry gets ARAP post

Environmentalists have all along charged that the Aquatic Resources Authority of Panama is run by the special interests it's supposed to regulate. The Torrijos administration has emphasized that point by hiring attorney María Patricia Díaz as the authority's secretary general. She's the treasurer of Granjeras Atuneras de Panama, a company seeking to fatten tuna caught in purse seines in floating pens in the Gulf of Chiriqui --- for which it would need a number of permits from ARAP. Environmentalists and sports fishing groups oppose purse seining for tuna, which was legalized in a surreptitious move by the National Assembly and President Torrijos at the end of the last legislative session (although the president says it was an oversight that he didn't veto that section of a law into which it was inserted) because it tends to strip large areas of the sea of all living things to catch a few commercial tuna. The raising of tuna in pens is opposed by environmentalists because they say that it pollutes the areas around the pens and tends to spread diseases that quickly spread among the caged fish to wild fish outside the pens. The appointment of a tuna industry exec to the regulatory board is taken by critics as a particularly insulting form of corruption.

Water tribunal rules against Panama

The Latin American Water Tribunal, an organization based in Guatemala that's the product of a treaty to which Panama is a party, has condemned the way this country hands out concessions for hydroelectric dams. The case, begun by a lawsuit brought by an alliance of church, community and environmentalist groups, arose from several dam projects in Chiriqui and Bocas del Toro provinces. The tribunal held that Panama improperly discounts the public uses of water resources and the value of natural resources affected by dams, and grants concessions that are excessive. The ruling, which was criticized by the National Environmental Authority (ANAM) on procedural grounds, is not directly binding on Panama but is sure to be cited in litigation concerning the country's many hydroelectric concessions and in debates over the Torrijos administration's plans to privatize the nation's water resources.

ACP gets record Moody's grade, breaks pledge to voters

How many times --- at taxpayers' expense --- did we hear the Panama Canal Authority (ACP) and the Torrijos administration promise the Panamanian people that the canal expansion job would be “self-financed?” It was a major theme of the illegally state-funded “yes” campaign. Forget all that now. With great fanfare the ACP and government want you to know that the Moody's bond rating service has given ACP bonds an A2 rating, which makes them investment grade. No Panamanian government paper has ever been rated so high, and it means that such bonds can be sold with a lower interest rate because of the lower risk --- lowering the cost of financing the canal expansion, we are told. But wait a minute --- they're going to sell bonds to finance the project, when they told us that it would be “self-financed?” Those corporate mainstream news media with interlocking directorates with the banking and construction industries --- all of them --- are reporting a brilliant financial triumph, and not mentioning the broken promise.

The hottest cruise in the cold region

In late August and early September it became possible to circumnavigate the Arctic Ocean, as the northern polar icecap had melted that much. In a development of great importance to the Panama Canal, we had the first commercial passenger cruise, aboard a Russian icebreaker, to navigate the Northeast Passage across the top of Russia. Tokyo to London is much shorter that way than through the Panama Canal.

Price tag on Noriega's mansion: $4,312,961.95

El Panama America reports that it has obtained documents from the Comptroller General's office and Catastro that indicate that when General Noriega's mansion is put up for sale, the winning bid will have to be at least $4,312,961.95. The property title has been difficult to determine, as prior to the 1989 invasion Noriega encroached on properties belonging to his neighbors and afterwards a neighbor grabbed land from the vacant Noriega estate. The disgraced and incarcerated general is fighting extradition from the United States to France, while here in Panama there are people who want him sent here to serve time for various crimes and others who want him to come back and live in luxury in his old digs. The legislature passed and President Torrijos signed a law that would allow Noriega to serve his current and potential future Panamanian prison sentences under house arrest.

How many Cubans...?

Actually, it's not a joke. The Ministry of the Presidency has ordered three million fluorescent light bulbs from Importadora-Exportadora de Objetivos Electro Energéticos (ENERGOIMPORT), a Cuban company. The price tag is $4 million. Of course, the Castro brothers' father did come from Galicia....

Seguro Social backs off from land sale

The Social Security Fund has canceled a sale of 17 hectares of land in Parque Lefevre, adjacent to Costa del Este, for $67.20 per square meter. The land, which would have been zoned for high-rise condos as well as lower density residential uses, is believed to be worth a lot more that the asking price. After criticism for squandering assets, the CSS board of directors decided to leave decisions about that parcel of land, which is also the subject of litigation, for the next administration.

Former state-owned bank managers on trial

Waldo Arrocha and Eduardo Ricaurte González, managers of the state-owned Banco Hipotecario Nacional (BHN) home loan institution during the Moscoso administration, have been ordered to stand trial in the 15th Penal Court for selling public-owned land at a small fraction of its true value to favored individuals, ignoring procedural safeguards against that sort of thing in the process. Three analysts for the BHN who were accused along with Arrocha and González were provisionally exonerated in the case.

High court maintains suspension on cable car proposal

It was all arranged --- part of a national park would be granted to a private concessionaire to build a tourist center atop Ancon Hill, from which cable cars would shuttle the visitors between there and the Amador Causeway. Environmentalists, historic preservationists and especially the people who live on Ancon Hill near the national park hated the idea. The National Environmental Authority and the Torrijos administration loved it, and supporters billed it as a “first world” tourist attraction something akin to Disney World. Panama City Mayor Juan Carlos Navarro, however, looks askance at Mickey Mouse developments in national parks, especially ones that are within city limits. He refused to issue permits for the project and vowed to block the proposal if he could. The matter soon hit the court system and on September 2, after the case took a couple of years percolating upwards, the full nine-member plenum of the Supreme Court ruled on the matter. The magistrates unanimously ruled that municipal governments have the power to protect green areas within their district limits and that when the mayor declined to issue a permit for the project he was within his rights to enforce city laws and policies that had existed before the tourist project proposal was brought up and which would bar the development. Precedent doesn't count as much under the Civil Code legal system as it does in Common Law jurisdictions, but this ruling does indicate that the present court is not inclined to let the national government exclude local officials from land use decisions and this attitude may extend to other cases.

Figali files $261 million suit

Let's see --- Jean Figali is some $14 million behind in the payments his Grupo F agreed to make to the government for the land he occupies on Amador. However, he got his friend and neighbor, Supreme Court magistrate Winston Spadafora, to cancel those bills for him. The centerpiece of his little empire, the Figali Convention Center, remains unfinished after contractors walked out years ago, saying they had not been paid, but it's still usable and used. Seeking to reverse his fortunes, Figali's suing the government for $850 million for alleged breach of contract, because, inter alia, there are electrical cables running underground through the property in question. He's suing the former director of the Panama Maritime Authority (AMP), Carlos González de la Lastra, for $15 million because the latter more or less called Figali a deadbeat in comments to La Prensa. And now Figali is suing the AMP for $261 because it has not fought for Grupo F before other government agencies when the company has tried to get environmental and other permits for a marina. That makes more than $1 billion in claims asserted in lawsuits that are pending, with at least one reliable vote out of nine on the high court. Ah, but Figali also seems to have presidential candidate Ricardo Martinelli on his side, or at least willing to cut him some slack. Martinelli is calling on the government to submit its many arguments with Figali to arbitration.

MOP, ANAM approve hotel expansion --- but not the city

The Ministry of Public Works (MOP) and the National Environmental Authority (ANAM) have approved the construction of a six-story hotel building with three decks of parking on the Cinta Costera landfill, to go along with the new helicopter pad and marina for Herman Bern's Hotel Miramar. The city government, however, has not issued permits for the job and municipal officials showed up soon after work began to serve a stop work order.

Used to be, Panama objected to contracts in perpetuity

There once was a president of Panama who famously objected to the 1903 Hay - Bunau-Varilla Treaty on the grounds that only God does things in perpetuity. But while Omar Torrijos did away with the allegedly perpetual, his son Martín has granted the Club de Yates y Pesca three hectares of the Cinta Costera landfill for its exclusive use for an “indefinite” time. The contract for the club's old premises was for 60 years and would have ended in 2017 --- but the club has always been in breach of that deal, as it never made any of the required payments. People from those families don't pay such bills, so it seems.

Despite court ruling, Petaquilla continues

How is it that when the Supreme Court decisively shoots down a company's claim that it's immune from environmental laws it can continue to defy the National Environmental Authority (ANAM) and continue a strip mine project for which no environmental permit has been issued? The answer to that question is not really to be found in the law, but ANAM director Ligia Castro claimed in La Prensa that it's not possible to force Richard Fifer and his Petaquilla Minerals to stop work on the Molejon Gold Mine, regardless of its illegality and the widespread environmental damage that it's causing.

Solar panel electric grid connections allowed

By law, back in the 90s when the Pérez Balladares administration privatized the old IRHE electric company people who generate electricity acquired the right to sell it to the national power grid. However, the electric industry corporations were put in charge of the regulatory bodies and this legal right was rendered meaningless, as companies claimed that to allow anyone other than themselves to sell power would lead to people being electrocuted and the electricity distribution system being damaged and because of those claims --- shown to be spurious by the examples of a number of countries where people with windmills sell power over the public electric grid with no such problems --- the regulators didn't allow connections by which individuals or small businesses could sell power over the state-owned ETESA grid. Finally, more than a decade after purported legalization, the National Public Services Authority (ASEP) has approved a regulation to allow those who generate electricity by way of solar panels to sell the excess beyond what they use to national power system. The sellers will be responsible for buying the proper transformers to avoid damage to the grid or to their own systems, and for the cost of installing the two-way meters that will allow the calculation of the offset of power generated for the grid from the price of power consumed off of the grid in customers' monthly bills. Solar generation will be limited to 10 kilowatts per customer. ASEP has asked the electric distribution companies to draft a form contract for this system of offsets by October 25. So far there are no regulations to allow the sale of power generated by windmills or other non-corporate systems to the grid.

The government's routine about windmills

If wind generated energy is cheaper and cleaner than that produced by burning fossil fuels, why are the costs of registering a wind generator much higher, and the permit periods much shorter, for wind generators than for thermal generators? ASEP director Rafael De Gracia explained it in El Panama America: when using the wind, one is making exclusive use of a public natural resource; where as one can put a thermal generator anywhere. (Carbon emissions into the atmosphere don't count as a use of a public natural resource, according to the ASEP point of view.) So for a thermal generating plant one must pay $100 for each kilowatt of capacity for the license, whereas one pays $500 for each kilowatt capacity for a wind generator; and 50-year concessions may be obtained for thermal plants, while for a wind generator only one-year permits are available. The basic draft of Panama's current energy policy was written during the Moscoso administration by a former ENRON executive, that company having before its demise been in the business of generating electricity at a thermal plant in Colon province. Look to the particular financial interests of ENRON and its surviving competitors and successors in the electricity generating business, rather than any rationale given by ASEP, to understand the different treatment given to fossil fuel and wind powered generators.

Dismal student performances

In a series of standardized tests given to Latin American students in the subjects of mathematics, Spanish and science, Panamanian kids' average scores were under 60 percent in each subject, while their counterparts in most of the other countries in the region scored higher. People can legitimately complain about the shortcomings of such tests, and blame can be and is assigned in different places by different people, but the numbers reflect a reality that business managers have been pointing out for years: Panamanian education is seriously dysfunctional at all levels and it's getting ever harder to find skilled employees here.

Two killed, four injured by septic tank gas

Two workers for the Xtra supermarket in 24 de Diciembre died and five others were hospitalized after they inhaled sewer gas, apparently while cleaning a septic tank behind the store. Although it's well known that the sewer gases in septic tanks are deadly poisons, the company did not provide the protective masks or clothing needed to safely work in such a toxic environment. In a statement to El Panama America the human resources director for Xtra denied that the company sent the workers to clean the tank, and that claim has been taken by the families of the victims as the likely prelude to a legal battle over compensation.

Editor's note: The Panama News erroneously reported earlier that three Xtra workers had died, when actually only two had died and one of those hospitalized was in critical condition.

Capira owes Chame big time

Seventeen years of cheating on a revenue sharing agreement, plus interest accrued on a six-year legal battle that ensued --- let's see, that adds up to more than $780 grand, much more than the cash-strapped municipal government of Capira can afford. Back in 1978, Capira and Chame signed an agreement to split revenues from offshore sand mining in the waters off their districts on a 50/50 basis. In 1985, Capira stopped sharing its revenues and after years of arguments, Chame took them to court in 2002. At last there is a ruling out of the Supreme Court, as in a $780,986.50 judgment in favor of Chame. So what's Capira to do? Municipal revenue sources are limited in Panama, and Capira's a generally poor district, so it will be a problem that candidates for city offices will mostly not want to address on the campaign trail.

Seguro cites unbudgeted expenses

The Social Security Fund (CSS) is about $47 million over budget due to what it describes as unforeseen expenses. The bigger part of it, however, is the result of a September 2007 Supreme Court ruling that held that people could collect their Social Security pensions while still being gainfully employed.

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