Minister of Economy and Finance Explains Modifications To Law 6
Thursday, June 14 2012 @ 09:24 AM EDT
Contributed by: Don Winner
"What we introduced yesterday was to modify the process. Before the shares could be sold through the stock market and with the collaboration of international markets, and now the sale can only be done through the Panamanian stock market," he explained. The minister said these shares may only buy be purchased by natural persons or legal Panamanian entities, and they can only buy up to a maximum of 1% ownership." According to De Lima, they included that they are going to provide incentives for these shares of stock to be purchased by government officials and private sector employees, and the money raised from the sale of these shares will be used for social investment projects or it could be destined to the Panama Savings Fund, or used for electricity interconnection projects.
"Law 6 established a ceiling of up to 5% which has now been reduced to 1%. The idea of democratization of capital has been mentioned, where we pursue a policy of strengthening local capital markets through the issuance of bonds and notes and Treasury bills on the Panama Stock Exchange, and not with debt placements in the international stock markets to diversify sources of funding available to the Panamanian State," the minister said.
In the early morning hours today Bill 486, which amends the Articles of the Consolidated Law 6 of February 3, 1997, which dictates the regulatory and institutional framework for the provision of electric utility, was approved in second debate. The Minister of Economy and Finance defended the speed of the discussion of this Bill by saying now they are discussing reforms to Law 6, that creates the regulatory framework for the energy sector. He said in July the Electricity Transmission Company, Inc. will conduct a tender for long-term energy that they hope will help set the price of electricity for the next 15 years, and to leave clear rules for new players to come and make the investments the country needs in the energy sector, and therefore that created the urgency to make the amendments of Law 6.
In response to the allegations made by the National Assembly Deputy from the Panameñista party, Jose Isabel Blandon, who says the sale of shares will only benefit those close to the President of the Republic, Ricardo Martinelli, De Lima said on TVN News what they hope to accomplish with these changes is to make the process as transparent as possible, which is why the State must file papers with the Superintendent of Securities to make a list of shares so any Panamanian can buy them.
The government included a surprise yesterday in the National Assembly to change the Act 6 of 1997 to sell the shares the State owns in the electric distribution and generation companies. (Prensa)
Editor's Comment: The politicians of the opposition political parties (PRD and Panameñista) are going bat-shit crazy over the idea that the Martinelli administration might sell off the shares of stock the State owns as a result of the privatization of the electricity and telecommunications sectors. These were privatized during the administration of Ernesto Perez Balladares (1994 - 1999) and the result has been greatly improved service. If you have not been around long enough to remember INTEL and IRHE - back when the government ran the electrical and telephone companies, service was horrible. It took months to get a telephone installed anywhere, if you could get one at all. Power service was worse, unstable and unpredictable. It was all chopped up and sold off, and the State ended up still holding most of the shares. Now, those shares will be privatized as well, and will pass to the hands of individual owners. The State will make its money by selling off those shares, and then using the money raised as they see fit. There's no restriction on what they might do with the money, so it could go to pay off debt, pay for even more infrastructure spending and improvements (if that's even possible), or they might just put the money into the Panama Savings Fund to be used in case of a natural disaster or an economic slowdown. And as far as Blandon's claims that only Martinelli's closest buddies will benefit, that's BS because if the shares on sold on the Panamanian stock market, then he can buy some himself if he wants. But no matter, they're going to make as much noise about this as they can.