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Panama Uniting The Continent For Electrical Interconnection From Mexico To Colombia

By Juan Carlos Martinez

There is a long standing, highly ambitious project which intends to connect all of Central America and Colombia with electrical lines in order to facilitate the exchange of electricity. Once again Panama serves as the bridge connecting the American continent. It is an electrical interconnectivity project which requires significant investment but is likely to contribute the same amount in savings in energy cost. Today, power is one of the costliest items in terms of doing business and in terms of cost of living.

The benefits for Panama in connecting electrically with Colombia stem from the fact that Colombia has an installed capacity of close to 14,000 megawatts and the internal demand it has is close to 9,000 megawatts leaving it with excess power which Panama needs. It being a win - win situation it is to be expected that prices will be highly competitive. Colombia produces excess energy from its ample array of natural resources such as oil, natural gas, carbon and hydroelectric. Panama on the other hand only produces energy from hydroelectric sources.

Anyone living in Panama for any extended period of time will have been through power shortages. In the best of cases the place you are in has a back up generator which starts running immediately but this is not the norm. Power shortages have a huge effect on productivity while at the same time causing physical losses from equipment that is damaged during the power surges. The interconnectivity project should help stabilize the supply of energy which will be noticeable most specially in summer when low water levels in Panama´s rivers mean there will likely be electrical rationing and power shortages.

The project has several components such as the physical installation of power lines for connectivity. Meetings among the countries negotiators to establish the legal and commercial framework under which the interconnectivity will work as well as the financial components are being addressed. The legal and commercial framework to be established is in its final round of negotiations and the negotiators hope for a conclusion by February 2010. The physical installation of power lines has two aspects: the line connecting Panama to the rest of Central America which is in the final phase and should be finished in 2014 and the line connecting Panama to Colombia which is in the final rounds of regulatory negotiations and is projected to be finished by 2012.

The line connecting Central America and Panama is a 1,800 kilometer line with capacity to transport 300 megawatts of energy at a cost of $494 million to be divided among the participating countries and part financed by the BID (Interamerican Bank for Development). The line connecting Colombia to Panama is 614 kilometer with the possibility to generate 2,443 gigawatt's a year at a cost of $2.8 billion of which $1.5 billion will be financed again by the BID (Interamerican Bank for Development).

This is one of the mega projects Panama has in line for these upcoming years and should lower the cost of electricity once both projects are completed. The project for interconnectivity to Colombia will also generate business opportunities as this project will be opened for bids once the regulatory framework is completed.

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