Amid Colombia’s energy sector crisis, the Energy and Gas Regulatory Commission (CREG) has approved a significant regulatory initiative between Colombia and Panama. After several technical meetings that took place between both countries, they finally made progress toward regional energy integration. The initiative promises additional revenue and encourages cooperation in the region.
The agreement basically aims to redefine the rules for the electricity market, including purchasing, sales, billing, portfolio management, and customer service. The primary goal is to reduce sector tariffs and enhance market efficiency.
According to Jose Antonio Jimenez Rivera, executive director of CREG, who spoke with the Argentinian outlet Infobae, “during this dialogue between both authorities, important areas were evaluated to make this a reality. These include short and long-term energy transactions, firm transactions, some general operational provisions, and the formation of a potential committee of regulators for the interconnection between both countries.”
Speaking from Panama, Zelmar Rodriguez Crespo, who heads the National Authority of Public Services (Asep), noted that “this draft bilateral regulatory agreement was crafted based on principles like economic efficiency, mutual benefit for both nations, regional vision, transparency, neutrality, simplicity, reciprocity, the feasibility of its effects, and recognition.”
It’s crucial to understand that the document approval isn’t automatic. It requires formal endorsement during a CREG session, which is where Colombia’s most significant regulatory decisions are made. A document can only take effect after it has completed the necessary legal and technical processes.
What this agreement means for Colombia and Panama
For both Colombia and Panama, this agreement represents a significant stride toward regional energy integration and heightened energy security. It promises a more robust and reliable power supply for both nations, yielding clear economic and environmental advantages.
The deal also paves the way for a multi-million-dollar energy exchange, with Colombia aiming to export burgeoning renewable energy to Panama. This offers Colombia additional revenue and can stimulate growth and job creations within its energy sector. Panama, in turn, could benefit from more stable and potentially low energy prices.
For Panama, this energy agreement, particularly through the electrical interconnection, offers several significant advantages just beyond energy security. It presents a crucial opportunity to diversify its energy matrix, gain access to more competitively priced energy, and reduce reliance on costly fossil fuels or other expensive imports.
This could notably ease pressure on Panama’s public finances and ultimately benefit consumers with more stable electricity rates.
Beyond just electricity, this agreement also deepens the overall relationship between Colombian and Panama, fostering cooperation in energy and other areas. At this point, and considering Colombia’s current energy crisis, this agreement becomes even more pivotal and urgent for the country to navigate current and future energy challenges.
Colombia is making significant efforts to expand its energy market
Colombia is making significant efforts to strategically expand its energy market, with a strong focus on diversification and sustainability, aiming to become a regional leader in clean energy. While prioritizing renewables and the energy transition, Colombia is also acutely aware of the need for energy security.
The government’s strategy emphasizes balancing economic growth with climate goals, attracting significant investments in renewable energy projects, and strengthening its transmission infrastructure to support the evolving energy mix. This balanced approach is crucial to meeting growing demand, universalizing energy access, and building a resilient and sustainable energy future for the nation.
Experts agree that establishing clear rules for transactions, dispute resolutions, and information access is crucial. This builds confidence for the private sector and could eventually open the door to future bilateral or multilateral agreements within Latin America.
For now, the goal of achieving a more robust regional energy market is still under construction. It remains to be seen how cooperation agreements will bring us closer to this purpose.