What Happened
Panama’s water and sanitation utility, Idaan, is once again at the center of debate over why service problems have persisted for more than two decades. The discussion points to governance failures rather than purely technical shortcomings, including heavy state intervention, weak boards, and the absence of real administrative and financial autonomy.
The criticism comes as Panama explores closer alignment with the Organisation for Economic Co-operation and Development, or OECD, and the public-sector standards associated with that process. Supporters of reform argue that stronger governance could improve transparency, reduce clientelism, and create conditions more favorable to investment and better public services.
What the Governance Review Found
A 2016 assessment by Panama’s Institute of Corporate Governance evaluated five state-owned enterprises using an OECD-based guide that measured 100 best practices across five categories. Idaan received the lowest score of the group, with 23 out of 100. The group average was 28, and the highest score reached only 36.
The review was revisited in 2019, but the findings did not show improvement. The most serious gaps were concentrated in two areas: the role of the state as owner and the responsibilities of the board of directors. Those categories accounted for 53% of the total score, underscoring how central governance structure is to Idaan’s performance.
Why Idaan Struggles
The assessment described a board that is not autonomous and does not hold final responsibility for the utility’s performance. Some contracting and financial decisions require approval from the Executive Branch, while the budget must pass through the cabinet and the National Assembly.
The board’s composition also raised concerns. Most members are appointed by interest groups and must be approved by the president, a process described as opaque and not clearly driven by merit. That arrangement leaves the board closely tied to political power and vulnerable to changes after each administration.
The review also pointed to weak oversight controls, limited disclosure, and a lack of financial reporting under International Financial Reporting Standards. It noted the absence of consolidated data on related-party transactions and no clear mechanism for managing potential conflicts of interest.
Broader Impact on Panama
Idaan’s problems have shaped the wider debate over water supply, sanitation, and wastewater management in Panama. The utility serves about 727,000 customers nationwide, and roughly 94% are residential users. Its performance affects households directly and has consequences for public health, work, and education.
Reform advocates say the challenge is not only to fix operations, but also to redesign the institution itself. One proposal under discussion is to transform Idaan into a new state water and sanitation corporation governed by merit-based principles and OECD-style corporate governance practices.
For now, engineers and technical staff continue to sustain a vital service under difficult conditions, including bureaucracy, administrative limits, and insufficient funding. The larger question facing Panama is whether structural reform can finally align the country’s water utility with the standards expected of a modern public enterprise.