Countries › Panama › Guide › 12. Sectors › Electricity market in Panama: concessions, generation licences, large customers, ownership limits and ASEP fines under Ley 6 de 1997

Electricity market in Panama: concessions, generation licences, large customers, ownership limits and ASEP fines under Ley 6 de 1997

Last verified: 2026-10-29 · Status: Stable

Ley 6 de 1997, consolidated in a texto único of 5 July 2021 ordered by Ley 194 de 2020, splits the sector into generation, transmission, distribution and sale, regulated by the Autoridad Nacional de los Servicios Públicos (ASEP). Hydro and geothermal plants, transmission and distribution need concessions (up to 50, 25 and 15 years); other plants need a licence. Customers above 500 kW per site may buy at freely agreed prices. Companies must have one activity as their sole purpose, generators cannot control distributors, and ASEP can fine providers up to B/.20,000,000.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Large customer threshold (maximum demand per site)	500 kWTexto Único Ley 6 de 1997 art. 6, as of 2026-10-29 · in force
Maximum term of hydro and geothermal concessions	50 yearsTexto Único Ley 6 de 1997 art. 46, as of 2026-10-29 · in force
Transmission concession term	25 yearsTexto Único Ley 6 de 1997 art. 46, as of 2026-10-29 · in force
Distribution concession term	15 yearsTexto Único Ley 6 de 1997 art. 48, as of 2026-10-29 · in force
Generation share of national consumption above which no new concessions	25 %Texto Único Ley 6 de 1997 art. 59, as of 2026-10-29 · in force
Maximum ASEP control fee on prior year billing	1 %Texto Único Ley 6 de 1997 art. 10, as of 2026-10-29 · in force
Maximum ASEP fine on providers	20000000 PABTexto Único Ley 6 de 1997 art. 151, as of 2026-10-29 · in force

The rule

1. Building and operating hydroelectric and geothermal plants, and the transmission and distribution of electricity for public service, require a concession granted by ASEP by reasoned resolution after a competitive selection, formalised in a contract.Texto Único de la Ley 6 de 1997 (Gaceta Oficial 29325-A), arts. 44 and 45, 2021-07-05 official text · verified 2026-10-29

2. Hydro and geothermal concessions last up to 50 years and transmission concessions 25 years; ASEP may extend them for up to the original term. Distribution concessions last 15 years; before expiry ASEP runs a competitive process to sell a block of at least 51 percent of the concession holder's shares, where the incumbent keeps the block if it matches the best bid, and a new 15 year concession is granted either way.Texto Único de la Ley 6 de 1997, arts. 46, 47 and 48, 2021-07-05 official text · verified 2026-10-29

3. Generation plants not subject to concession (thermal, solar, wind and others) need a licence granted by ASEP by reasoned resolution, after meeting environmental, industrial safety and establishment rules.Texto Único de la Ley 6 de 1997, art. 50, 2021-07-05 official text · verified 2026-10-29

4. Companies with plants in Panama must have one of the activities (generation, transmission, distribution, sale) as their exclusive corporate purpose, with exceptions: self generators and cogenerators selling surplus, transmission and dispatch only by the State transmission company, sale tied to distribution except generators selling to large customers, and distribution combined with generation in isolated systems or within 15 percent of demand.Texto Único de la Ley 6 de 1997, art. 52, 2021-07-05 official text · verified 2026-10-29

5. Generators and their owners may not take part, directly or indirectly, in control of distributors, nor seek new concessions if they would then serve more than 25 percent of national electricity consumption (the Executive may raise the cap). Distributors may not control generation whose aggregate capacity exceeds 15 percent of demand in their zone.Texto Único de la Ley 6 de 1997, arts. 59 and 85, 2021-07-05 official text · verified 2026-10-29

6. A large customer (gran cliente) is a person with maximum demand above 500 kW per site, who may buy at freely agreed prices with other market agents or opt for the regulated tariff of its voltage level. Generators may sell directly to large customers.Texto Único de la Ley 6 de 1997, arts. 6 (definition) and 105, 2021-07-05 official text · verified 2026-10-29

7. ASEP charges a control, oversight and inspection fee of no more than 1 percent of the previous year's total billing of distributors and of generators selling to large customers.
Cost to do it: Up to 1 percent of prior year billing.
Example: A distributor that billed B/.400,000,000 pays at most B/.4,000,000. / US$400,000,000 billed: at most US$4,000,000.Texto Único de la Ley 6 de 1997, art. 10, 2021-07-05 official text · verified 2026-10-29

8. Generators may import the fuels needed to generate electricity free of taxes, fees and charges, and enjoy any exemption other special laws give other generators; they have access to transmission and distribution networks and may sign supply contracts with other market agents.Texto Único de la Ley 6 de 1997, art. 58, 2021-07-05 official text · verified 2026-10-29

9. ASEP may sanction providers with a warning, fines from B/.1,000 to B/.20,000,000, and daily fines from B/.100 to B/.10,000 for ignoring its orders, besides terminating the concession or cancelling the licence where applicable; fines are passed to customers through tariffs within 60 calendar days.
Cost to do it: Fines B/.1,000 to B/.20,000,000; daily fines B/.100 to B/.10,000.
Example: Ignoring an ASEP order for 30 days at B/.5,000 a day costs B/.150,000. / 30 days at US$5,000: US$150,000.Texto Único de la Ley 6 de 1997, art. 151, 2021-07-05 official text · verified 2026-10-29

10. Nuclear power plants require special legislation.Texto Único de la Ley 6 de 1997, art. 164, 2021-07-05 official text · verified 2026-10-29

Activity	Title	Term	Article
Hydro and geothermal generation	Concession	Up to 50 years, extendable	44, 46, 47
Other generation (thermal, solar, wind)	Licence	Set in the licence	50
Transmission	Concession (State transmission company)	25 years, extendable	46, 52, 68
Distribution	Concession	15 years, then share auction	48

Title needed by activity under Ley 6 de 1997 (texto único 2021).

Worked example

A data centre drawing 2 MW at one site is a large customer and can sign a bilateral supply contract with a generator at a negotiated price instead of the regulated tariff.
A solar developer needs an ASEP generation licence, not a concession; a 30 MW run of river hydro plant needs a concession won in a competitive process.

Step by step

Define the activity and pick the title: concession for hydro, geothermal, transmission or distribution; licence for other generation.
Set up a company with that single activity as its exclusive purpose.
Obtain environmental approval and the ASEP concession or licence, then sign up as a wholesale market agent and with the national dispatch centre.
Budget the annual ASEP control fee if selling to distributors or large customers.

Common traps

The single purpose rule means a generator cannot also run a distribution business in the same company outside the listed exceptions.
The 25 percent consumption cap applies when seeking new concessions, counting affiliates.
ASEP fines are large (up to B/.20,000,000) and reach daily penalties for ignored orders.
Distribution concession renewal works through an auction of at least 51 percent of the shares, not an automatic extension.

Sources

← Metal mining in Panama: the indefinite moratorium of Ley 407 de 2023, the Cobre Panamá ruling and what is still allowedRenewable energy incentives in Panama: solar under Ley 37 de 2013, wind under Ley 44 de 2011, tender preferences and self consumption →

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.