The decision of the Legislative Assembly to not endorse the bill that seeks to approve the contract between the government and Minera Panamá, shows the fragility of the contracts between the Panamanian state and companies.
Tuesday, June 4, 2019
The obstacles to the mining project date back several years, since the legal dispute began in 2009, when the Environmental Impact Center (CIAM) filed an appeal of unconstitutionality against the contract granting a 20-year concession to exploit and commercialize the gold, copper and other mineral resources of Cerro Petaquilla.
In October 2018 the contract Law 9 of February 25, 1997 was declared unconstitutional by the Supreme Court of Justice and according to the judicial ruling, the concession would not represent the best interests of the State.
The issue recently returned to the discussion table, since last May 29, after the negotiation reached the National Assembly, the Legislative Commission on Economy and Finance rejected in its entirety the contract between the State and Sociedad Minera Petaquilla S.A, currently Minera Panamá, arguing that it is "harmful to the country."
Nelson Jackson Palma, deputy president of this legislative body, said that the different communities in and adjacent to the mine are in extreme poverty and so far, have not been benefited, so it is necessary to review this contract more closely, explains a statement from the Assembly.
See full press release.
The president-elect, Laurentino Cortizo, will have to face this dispute. On the subject, he explained to Telemetro.com that "... It will be considered, the review should not take too long, are contracts that have their period. We consider it right that the new government should take on that responsibility, it is important, right now talking about beating the drum that contract is not good.
Cortizo added that "... the issue of legal security will be respected, but he warned that companies have to respect the right to review clauses by clauses in order to comply with contracts."
The business sector rejects these decisions. On the matter Jorge Juan de la Guardia, president of the Cciap, said to Elcapitalfinanciero.com that "... One of Panama's main assets, and which has been a tool to attract international capital, is its legal security; but these decisions send the wrong message to local investors and particularly to those from other latitudes."
Adverse court decisions against companies, social and political conflicts and fiscal issues are some of the factors that are impeding the development of productive projects in Central American countries.
One of the latest court decisions affecting companies with investments in the region was that of Minera Petaquilla, in Panama.
Arguing that the basic principles of public procurement were not complied with, in Panama the contract between the State and the company Petaquilla Minera has been declared unconstitutional.
The legal dispute began in 2009, when the Environmental Advocacy Center (CIAM) filed an unconstitutionality appeal against the contract that grants a twenty year concession to Cerro Petaquilla to exploit and sell gold, copper and other mineral resources.
After seven months of suspended operations, the company that operates the Escobal mine in Guatemala has announced that it is making 250 workers redundant.
The approval of a draft contract-law in favor of Vera Gold Corp. would ensure an investment of more than $50 million in the former Santa Rosa mine.
This contract-law must first be approved by the Panamanian Congress. The lawyers explained that the aim of this type of concession by law is to protect the company.
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