According to a statement from the Assembly of Panama, the resources will be used to strengthen the Energy Compensation Fund and to cover cost overruns generated by distribution companies.
"The goal of compensating electricity distribution companies for the amounts that they no longer perceive due to the stabilization of electricity rates for regulated customers, is to make payments to the electricity generating companies with mixed capital stock, so that electricity rates for end users do not increase sharply over the coming years, due to changes in petroleum products", said Omar Castillo, Deputy Minister of Economy and Finance.
Source: Asamblea Nacional de Panamá
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Electricity companies announced that there will be an increase in energy rates if Cel does not fulfill its commitment to subsidize consumption.
The scarcity of liquidity in the financial market could be the reason the Rio Lempa Executive Hydroelectric Commission (CEL) has not been able to pay the $94.7 million in subsidies claimed by the generating and distributing electric companies, according to the Technical Secretary oh the Presidency, Eduardo Ayala Grimaldi.
The National Economic Council (CENA) has approved $35.8 million to subsidize the electricity tariff.
A press release from the Ministry of Economy and Finance of Panama reads:
The National Economic Council (CENA) has approved a draft resolution by which the Cabinet authorizes the Ministry of Economy and Finance, as trustee, to transfer to the Electric Transmission Company S.
Subsidies in the last 6 years amounted to $430 million; authorities have announced reductions and the first casualties will be heavy users.
The government of Panama has taken the first steps towards cutting subsidies for electricity, and the first sector affected may consumers using between 451 and 500 kW, 2% of total users, authorities said.
Electricity distribution companies will receive about $300 million less in state subsidies leading them to foresee an increase in rates which will affect the productive sector.
The State will compensate only the Chiriqui electricity distribution company (Edechi) with $27 million and the electricity distribution company Metro-West (Edemet) with $38 million, ceasing to give subsidies to the company Ensa.