JAVIER E. GUTIÉRREZ ALZATE

Panama 2020 | GREEN ECONOMY | VIP INTERVIEW

TBY talks to Javier E. Gutiérrez Alzate, General Manager Central America of Celsia, on energy demand in Panama, partnerships, and expansion throughout the region.

How has the pandemic impacted your operations in Panama, and what impact have you seen regarding energy demand?

It has had a deep impact. We have in place many contingency measures implemented to protect employees and customers. All our office employees are working remotely, and we have enforced several policies to ensure social distancing and the health of our personnel. At the same time, we are also taking care of the business end. In this respect, cashflow management has been essential for us and we are working with clients and suppliers who can help us to maintain healthy finances. Finally, we have maintained our social initiatives. We have made donations to express our solidarity with society. We are proud that we have participated in providing the energy consumption of a Hotel facility used as hospital to treat patients affected by the pandemic. Additionally, alongside with other companies of Grupo Argos, our corporate group, we reached an agreement with the Ministry of Health, to provide oxygen treatments for COVID-19 positive patients in their homes as a mean to reduce pressure on hospital infrastructures by lowering the percentage of patients who require hospitalization. We made an initial donation of USD100,000 to this program intended to serve approximately 100,000 people in conjunction with the health administration in the area of Juan Diaz in the province of Panama. Another pillar for the company is to maintain a healthy business for our shareholders. The business is seeing lower revenue; however, we are seeking to make it profitable even during these difficult times. We are also taking care of our stakeholders. On the demand side, we have seen a decrease, particularly in the hospitality and tourism sectors, where some companies have had to halt operations almost entirely. Still, we have maintained many of our operations because we have some stable customers. Nevertheless, overall demand has fallen by about 20% from pre-COVID-19 levels.

What emerging trends do you expect to persist beyond COVID-19?

We do not expect any long-term structural changes to demand after the pandemic is over, with the demand growth rate returning to normal levels after a year and half or two years. Offices and real state could be affected, however. Remote working is going to increase and that could impact our commercial clients. Consumption in the suburbs might increase, while it could decrease in the city center because workers are not going to their offices, but the overall level will normal. In the long run, the fundamentals are strong and industries and commerce will recover.

Can you elaborate on your partnership with Innowatts and the potential that these solutions have for your clients?

This partnership was developed through a capital venture. We are reviewing many start-ups to analyze which of them could have potential for our business. That was done in 2018, and we are in the process of an operative integration with Innowatts. We have high expectations that this start-up will grow. We have an innovation division that is seeking to bring that company into a local development. We are seeking to implement these services to different clients, but first for Colombia, which is where our innovation division is located. We would then bring it to other markets such as Panama.

What's the current status of your ongoing projects in Central America?

We are developing a 10MW solar farm in Chiriquí. The implementation process of that farm was halted due to the pandemic. Our goal is to have this 10MW operational by 2021. We have another 10 MW solar farm in Honduras for Argos, a company in our group. We also have a 4MW farm in Honduras. We should have at least 40MW generation capacity in solar energy by the end of 2021. As for wind power, we do not expect to open new plants and will continue with our existing plant in Costa Rica. We are waiting to see prices changes in the battery and storage market to address these technologies in Central America which would be a significant step forward. As for solar, we want to add 30MW of capacity in the next two years for our B2B segment. This B2B segment is our main goal in Central America. We do not have a distribution business in Central America; however, we are constantly looking for opportunities in areas in which we already have experience in Colombia. We also want to implement the storage capacity associated with our B2B clients.

What's your outlook for 2020 in Panama and its energy sector?

We expect Panama to continue gradually lifting quarantine measures and reopening the economy. We expect that some sectors will be open again within the next few months. By our forecast, we think that the negative outlook could be worse than what the rating agencies believe. In general terms, the quicker the economy reopens, the faster the recovery. We think that the economy is poised to shrink by 5% this year.

What would your message be to the international community on Panama's capacity to recover economically from the pandemic?

Panama is a hub in the region and the global importance of the canal is clear. And that will continue to be the case in the future. Panama has a strong banking industry and a lot of well-educated individuals. In my view, Panama has a good chance of recovering quickly. Besides, the Tocumen airport is important and a hub in the Americas. In a nutshell, I send a positive message because Panama is a strong country. Investors will continue investing here in the long term. Do not forget that this is a dollarized economy, which is another important factor.