CONNECT FOUR

Panama 2019 | ENERGY & MINING | FOCUS: FOURTH TRANSMISSION LINE

Panama is building its fourth major line of transmission to bolster the national grid and keep the lights on in provinces far from urban areas.

State officials in Panama are seeking to create a robust electrical grid that will ensure fewer power outages across the country. In 2016, state transmission company Empresa de Transmision Electrica (ETESA) began drawing plans for a fourth line of transmission that would run from urban hubs near Panama City to the country's western provinces near popular tourist areas in Bocas del Toro.

With aims to have the line operating by 2023, state officials began accepting bids from international construction companies, but the allocation process has hit numerous delays. Regardless, ETESA is pushing forward with the bidding stage, and continues to seek proposals for the design and maintenance of the line, with hopes to begin construction in 2020.
“Our priority is to develop this transmission line in a timely manner so that it is in operation when it is needed so as not to incur, once again, incremental and unnecessary costs for the country," said Gilberto Ferrari, General Manager of ETESA, at a bidding meeting.

Formally known as the Chiriquí Grande-Panama III Transmission Line, this 500-kV line will begin at the Chiriquí Grande Substation in the Bocas del Toro Province and will run about 317km across the country to the Panama III Substation, just east of Panama City. The transmission line will provide electrical services to the provinces of Bocas del Toro, Comarca Ngäbe Buglé, Veraguas, Colón, Coclé, and Panama.

By upgrading the national grid infrastructure, ETESA aims to increase the transmission capacity of high-voltage energy, reduce system losses, increase safety, and offer backup to the national interconnected system. The line will also allow the transfer of new renewable energy projects, a proliferation of which is being installed via the nation's push for green technologies to urban areas with high energy needs in Panama's central corridor.

“Today, we are unable to transmit all the energy generated in Chiriquí and Bocas," Ferrari continued. “We fail to bring in 485MW of hydro and solar energy, not to mention that we do not have the capacity to import. By 2020, when the system has the capacitors and STATCOMs in operation, the limitation will fall to 270MW, but it will not disappear."
By increasing the capacity of the national electrical grid, state officials estimate energy losses, which currently amount to USD51.6 million per year, will be reduced to USD29.4 million.

In April 2019, two of five prequalified companies submitted proposals to ETESA to build and operate the line, which is estimated to cost approximately USD300 million. Among the bidders were Consorcio InterPanama and the China Electric Power Equipment and Technology Co. Ltd. The tender process was voided in May 2019, after ETESA claimed the two bidders did not meet the minimum requirements set in the proposal agreements. A new bidding round is expected to begin in the summer of 2019, once ETESA finalizes modifications to the terms of the public tender.

“The Third Line of Transmission was supposed to be ready in 2013, but it was completed four years behind schedule," Ferrari said. “We are working to avoid this with the timetable we have for this project."

The fourth transmission line is being developed under a build, operate and transfer (BOT) arrangement that allows ETESA to include private financing and development for sub-contractors, while maintaining transmission concessions. Despite the delays, the arrangement was recognized as “stable" by Moody's, with a BAA1 rating. From the start, ETESA has been working with consultation and management advice from the International Finance Corporation (IFC), a member of the World Bank Group.
Once a bidder is chosen, the fourth line of transmission will be constructed in two phases and will bolster energy security and reliability throughout the nation's most populated regions.

“In order to not have to tender a new 230kV project from the west to the east in the next five to 10 years, this project will be carried out in two stages, the first to meet the needs of today and the immediate future," Ferrari said. “The second phase will be executed when the generation increases and it is necessary. With this, we avoid having to manage twice the easements and impact studies that would represent costs for these projects that are paid directly from the tariff."