Panama Energy
Energy is generally considered a part of industry, to the
extent that it is an intermediate input in the production process.
In Panama, however, the largest shares of energy are sold to the
consumer and to commerce. Therefore, a significant portion of
energy used in Panama should be considered a part of the services
sector; for the sake of this analysis, however, energy is placed
under industry, following conventional practice.
Panama's energy production has increased substantially, from an
average annual growth rate of 6.9 percent between 1965 and 1980 to
11.1 percent between 1980 and 1985. The expansion of hydroelectric
generating capability has been responsible for most of the growth.
Per capita energy consumption has increased, from 576 kilograms of
oil equivalent in 1965 to 634 kilograms in 1985. This figure is
higher than that of Nicaragua (259 kilograms) and Costa Rica (534
kilograms) but lower than that of Colombia (755 kilograms) and
Mexico (1,290 kilograms).
Panama depended on petroleum for 80 percent of its domestic
energy needs in the late 1980s. Petroleum exploration has been
underway since 1920, but without success; as a result, the country
is dependent on imported petroleum. Saudi Arabia and Venezuela were
the primary suppliers until 1981, when Mexico replaced Saudi Arabia
and joined Venezuela in the San José Agreement of 1980, under which
the two countries supply oil to Caribbean Basin countries on
concessionary terms. Panama nearly halved its imports of oil
between 1977 (20.5 million barrels) and 1983 (11.8 million) in
response to rising oil prices. Oil imports have declined as a share
of the total value of imports, from 33 percent in 1977 to 19
percent in 1985; in the latter year, the value of oil imports was
US$19.2 million.
The country's only oil refinery, near Colón, has a capacity of
100,000 barrels per day. Since 1976 it has been operating far below
capacity, because greater use has been made of hydroelectricity.
Refinery products supplied the domestic fuel for thermal power
plants, most of the transportation system, and other minor uses. In
1977 about 64 percent of the imported crude was reexported after
refining, mostly to ships' bunkers; by 1983 that figure had fallen
to 35 percent. The government has approved the construction of a
second refinery, also near Colón, with a capacity of 75,000 barrels
per day.
Hydroelectricity accounted for 10 percent of energy consumption
and was the country's main domestic energy resource in the late
1980s. Panama has been substituting hydroelectric power generation
for petroleum-based thermal generation since the late 1970s. By
1980, some 30 sites had been identified on the country's numerous
rivers, which, if developed, could generate 1,900 megawatts of
power. The capacity for generating electricity was 300 megawatts in
1979; in 1984 it had increased to 980 megawatts, of which 650
megawatts was hydroelectric and 330 was thermal. The increase was
due in large measure to the Edwin Fábrega Dam, on the Río Chiriquí,
which began operation in 1984 with a generating capacity of 300
megawatts.
In 1985 the Institute of Hydraulic Resources and
Electrification, responsible for power generation and distribution,
initiated a five-year program to expand Panama's electrical
generating capacity. At the time, there were 275,429 electricity
consumers. A major goal of the program was to increase the
distribution of electricity to an additional 12,000 people in rural
areas.
Other energy sources, such as bagasse, charcoal, and wood,
accounted for the remainder of energy demand. Firewood supplied
half of the country's energy requirements as late as the 1950s but
declined rapidly thereafter, partly because of the deforestation it
engendered. Bagasse was used as fuel at sugar mills. Coal reserves
were discovered in the Bocas del Toro region in the 1970s, near the
border with Costa Rica. If commercially exploitable, the coal in
the region could be used for generating electricity. In August
1985, the government announced plans to explore the reserves, with
funding from the United States Agency for International Development
and the United States Geological Survey.
Data as of December 1987
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