Rules for the Natural Gas Business Questioned

Companies in the fuel industry put forward their observations on the bill that aims to regulate the public service of natural gas in Panama.

Thursday, November 9, 2017

So far the National Authority of Public Services (ASEP) has received comments from 15 companies and organizations regarding the content of the draft law that aims to regulate the business of production and marketing of natural gas as a fuel in the country. reports that "...Most of the opinions proposed recommend adding information to the draft bill.  The Association of Large Electricity Customers of Panama said that the interests and rights of consumers should be taken into account, as well as the effects that the introduction of this fuel will have on the energy matrix on the final users of electricity."

See also: "Thermoelectric plant for $400 million"

"... The company AES expressed the need to accompany the incentive initiative with various activities in the fuel supply chain, while Unión Fenosa, which has a share of the energy distribution market, said that the preliminary draft does not establish a definition that would allow for a logical order to be followed of the activities up until the delivery of the final fuel or customer."

Martano Inc, for its part, commented that "... article 5 should include, in order to avoid confusion, the fact that among the activities of general interest there is also the transportation of gas by Dedicated Gas Pipeline."

In the view of representatives from Martano, "...There is an inconsistency in the definition of the Economic Efficiency Principle since the "lowest economic cost" is not necessarily equal to the price represented by a competitive market. The economic principle of efficiency says that the price and quantity produced must be at the point where the marginal revenue is equal to the marginal cost while the lowest economic cost (or the minimum efficient scale) is not necessarily where the marginal revenue is equal to the marginal cost.  Please consider removing the phrase "lowest economic cost" from the definition of Economic Efficiency Principle in order to avoid confusion."

See details of the Bill and comments sent by the companies (in Spanish).

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