June 24, 2010 / 5:01 PM / 10 years ago

Panama says six-nation power line ready in Q1 2011

* Will connect six nations, 37 million consumers

* Project seen reducing power shortages, cutting costs

* Panama also working on Colombia cable for 2014

By Daniel Wallis

CARTAGENA, Colombia, June 24 (Reuters) - Panama said on Thursday a 1,788 km (1,110 miles) electricity transmission line serving 37 million people across six Central American countries should be operational by the first quarter of next year.

The SIEPAC line was first proposed more than two decades ago and was meant to be completed in 2006, but it has suffered repeated delays. It will connect consumers in Panama, Costa Rica, Honduras, Nicaragua, El Salvador and Guatemala.

“All that remains is for 30 km (19 miles) of cable to be finished in Costa Rica, and then for Costa Rica’s Congress to approve one more protocol,” Panama’s Secretary of Energy, Juan Manuel Urriola, told an oil conference in Cartagena, Colombia.

“It should be operating by the first quarter of next year.”

The transmission line is expected to reduce power shortages, cut operating costs and attract foreign capital to the region, as well as optimizing the sharing of resources like hydropower.

One feasibility study in the 1990s estimated SIEPAC could trim charges for electricity consumers by up to 20 percent.

Urriola said Panama was also working with Bogota to build a separate 614 km (380 mile) transmission line heading east into neighboring Colombia, which was expected to be working by 2014.

PANAMA AIMS TO BE ENERGY HUB

“We’re working on these projects with Central America, now we’re working with Colombia, and we’ll look to see what other opportunities there may be,” Urriola said.

“We want to become an energy hub for Central America.”

Panama is one of the best performing economies in Latin America, growing 2.4 percent last year even as most of the region contracted. The global economic recovery and a $5.25 billion expansion of the Panama Canal is expected to contribute to projected growth of around 5 percent this year.

A generation after it shed a tradition of military rule, analysts say canny fiscal management and good stewardship of the canal have made the tiny country a model of success for today’s frontier markets. [ID:nN23208633]

Delegates at the oil meeting in Cartagena heard about the big estimated benefits of integration schemes like Panama’s, but also that such projects were often pegged back by a lack of political will and fear by states of relying on neighbors.

Luis Fernando Alarcon, general manager of Colombia’s ISA group, said a separate proposal to add electricity connections between Colombia, Ecuador, Bolivia, Chile and Peru was estimated to create some $3.4 billion in savings for those nations.

But he said those governments had been too slow to take advantage of the readily available benefits from integration.

“The national benefits of electrical interconnection are a banquet served right in front of us,” he said. “But due to lack of political will and lack of political agreement, the meal just remains on the table and we are not able to enjoy it.” (Editing by Jack Kimball; Editing by David Gregorio)

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