Panama’s electricity sector is facing its most ambitious reform attempt in decades, as two separate draft laws — one from the Executive branch and one backed by the Vamos coalition — propose sweeping changes to how power is distributed, sold, and regulated in the country, just two years before the current distribution concessions expire in October 2028.
What Happened
The Executive branch, through Minister of the Presidency Juan Carlos Orillac, presented bill 705 on September 7, 2026. The proposal, now pending first debate in the National Assembly’s Commerce and Economic Affairs Committee, would modify the regulatory framework governing the Panamanian electricity sector, amending provisions of Law 6 of 1997 and Law 26 of 1996.
One of the bill’s most significant innovations is the creation of an intervention mechanism that would allow the National Authority of Public Services (ASEP) to take over an electricity distribution company whenever the continuity of service is at risk. An administrator with electricity sector experience would be appointed to run, supervise, and manage the company’s operations, with the cost of the intervention borne by the distributor.
The bill also reshapes the future of the concessions held by distributors ENSA and Edemet-Edechi (Naturgy), which expire in October 2028. While maintaining the 15-year concession period, it requires ASEP to convene a competitive process for the sale of the majority share package — at least 51% — of the distribution companies before expiry. The Panamanian State owns the remaining 49%. Current operators could keep the concession if they match or exceed the highest competing offer.
Additional provisions include transferring responsibility for rural electrification projects to distributors, requiring investments in smart grids and improved metering systems, and capping market concentration by barring generators from controlling distributors and limiting new licenses for companies already serving more than 30% of national consumption, with an exception for large supplies such as data centers.
For consumers, the bill mandates that distributors resolve billing or high-consumption complaints within 15 days — otherwise the claim is automatically resolved in the customer’s favor. Fines for serious violations could reach $20 million, with daily penalties of $100 to $10,000 for non-compliance with ASEP orders.
Separately, on September 10, Deputy Yamireliz Chong of the Vamos coalition presented a second draft law to reform the electricity market. Her proposal would open the market to independent power marketers, legally define the “prosumer” — customers who generate their own electricity and can inject surpluses into the grid — and guarantee the right to interconnect renewable systems. Small installations up to 10 kW would receive a simplified approval process with a maximum five-business-day response time.
The Chong proposal also separates grid operation from electricity sales, allowing licensed independent marketers to sell to eligible clients, with a neutral digital platform managed by the National Dispatch Center (CND) enabling provider switches within 48 hours. Market opening would be gradual, starting with clients demanding 100 kW or more and dropping to 50 kW in the second year. Its sanctions regime would replace fixed fines with graduated penalties of 0.1% to 10% of the infringer’s annual regulated revenues, with funds redirected to compensate affected customers.
Background
Panama’s electricity distribution market has been structured around concession contracts since the sector was privatized under the framework of Law 6 of 1997. ENSA and Naturgy (operating Edemet and Edechi) currently hold the distribution concessions, with the State retaining a 49% stake in each company. Those contracts expire in October 2028, making the current legislative debate a decisive moment for determining who controls distribution for the next 15 years.
Under the existing model, distributors buy power and energy through procurement processes organized by the state-owned Transmission Company (ETESA), and contracts require countersignature by the Comptroller General. The Executive’s bill would shift that procurement role to the distributors themselves — jointly or individually, under ASEP parameters — effective October 22, 2028, and would remove the Comptroller’s countersignature requirement.
Service quality and billing disputes have long been recurring sources of friction between consumers and distributors, while the growth of data centers and rooftop solar has intensified debate over how the market should evolve.
What This Means for Panama
If approved, the Executive’s bill would give ASEP a powerful new enforcement tool against non-compliant distributors, with concessions potentially terminated for repeated breaches of contract obligations, investment programs, rural electrification targets, or quality indicators. The competitive sale of majority share packages would also set the rules for one of the most consequential energy decisions of the decade: who controls Panama’s electricity distribution after 2028.
For businesses, the removal of Comptroller countersignature requirements and the new special tender mechanisms could streamline energy contracting, while the 30% concentration cap may reshape expansion strategies for large generators — though the data center exemption leaves room for major industrial supply deals.
For households, the changes are more direct: a guaranteed 15-day response to billing complaints, automatic resolution in the customer’s favor if deadlines are missed, and bill credits when companies fail to meet quality standards. The Vamos proposal goes further, potentially opening the retail market to competition and enshrining the right to self-generation.
Both initiatives must now pass through the National Assembly, where deputies can modify, eliminate, or add provisions before any final vote. With two competing visions on the table and the 2028 concession deadline approaching, the legislative debate over Panama’s electricity market is set to be one of the most closely watched in the current session.
This story was originally reported by La Prensa.