The man responsible for leading the privatization of Panama’s energy sector, Fernando Aramburú-Porras, said during a conference organized by the College of Engineers and Surveyors that restructuring that country’s formerly chaotic energy system “was a pill we had to swallow to sustain economic growth that we enjoy today.”
The bottom line, he said, was seeing it through from start to finish and including the unions in the process.
Still, getting that support did not come easily or inexpensively, he said. Ultimately, bringing the unions on board represented an expense of about $80 million for Panama.
“But I believe it was necessary: without dealing with that obstacle never would have gotten where we are today,” said Aramburú-Porras, who led the restructuring and privatization of Panamas electricity sector in 1998 from his post at the Institute of Water and Electricity
To get the unions to concede, he said leaders were taken to other countries, including Chile, which had successfully privatized their energy sectors and in some cases, made union members shareholders or investors in the system.
Meanwhile, he warned that the worst enemies in the privatization process are politicians.
“You have to let market forces fight each other, let the system flow without intervention of political forces. But just the same, you have to create a team and a plan with a clear view to negotiate with multinationals coming to do business; companies that have more capital than your country,” he said.
While Panama’s 10 energy, transmission or generation companies are fully privatized, the transmission system is not remaining the most inefficient of all and his “only regret,” said Aramburú-Porras, who has more than 35 years experience in public and private management and was the first Minister of Economy and Finance of the Republic of Panama in 1999.
“The issue of energy reform in Puerto Rico is the most relevant today, and it was our responsibility to look at experiences from other countries and provide a forum for diverse technical positions and then analyze what is applicable to Puerto Rico. This is why Aramburú’s conference is so vital,” said Edgar I. Rodríguez-Pérez, president the local professional group.
Today in Panama it is possible to fine private companies that fail to respond to a complaint or power failure in a given span of time, something that was impossible when the system belonged to the government, he said. Similarly, high-volume consumers can buy directly from the company they want without intermediaries.
Panama’s economy is one of the most stable in Latin America, fueled by the financial, tourism and logistics services sectors, which account for 75 percent of its GDP. From 2003 to 2009 — a period that coincides with the 15 years since the energy sector was privatized — the country’s GDP doubled, led by high domestic and foreign investment.