Draft bill 106.

Summary.

The draft bill proposes measures for domestic biofuel production linked to energy security, agricultural development, environmental protection, and rural employment. It provides for agricultural settlers, farmers, and sugar mills to participate in production, distribution, and marketing on equal terms, with access to permits, credit, and technical assistance. The State would promote cooperatives using local feedstock, including sugarcane. The Panamanian Autonomous Cooperative Institute (Instituto Panameño Autónomo Cooperativo, IPACOOP) would establish a training program, provide advice on forming cooperatives, and facilitate access to support mechanisms, also aimed at joint marketing.

Article 4 amends the licensing framework in Article 9 of Law 42 of April 2011. The National Energy Secretariat (Secretaría Nacional de Energía) would issue permits to produce, blend, market, transport, store, and import biofuels in the Republic of Panama, also in accordance with Cabinet Decree 36 of September 17, 2003. License A would cover industrial production and marketing of bioethanol made from domestic feedstock. It would require proof of production capacity or an approved investment plan verified with the involvement of the Ministry of Agricultural Development (Ministerio de Desarrollo Agropecuario, MIDA). It would last 15 years and be renewable, with annual assessment of targets; repeated failure to meet them, a shutdown exceeding 90 calendar days, or false information could lead to suspension or revocation. License B would allow holders of License A with verified productive investment to import semi-processed alcohol of up to 97.2%. The Coordination and Monitoring Commission for the Biofuels Program (Comisión de Coordinación y Seguimiento para el Programa de Biocombustibles) would set and allocate the annual quota based on investment, progress, and production and, for agricultural suppliers, acreage, deliveries, and labor participation. It would last 5 years. License C would temporarily address supply needs for 12 months, with one possible renewal and reviews every 6 months; a shutdown exceeding 30 days or irregular reports could lead to revocation. License D would cover blending, trade, transport, and storage for a renewable 5-year term. Licenses and quotas would be public, and applications would be submitted through a lawyer.

Article 5 amends Article 12 of Law 42 of April 20, 2011. Sugar mills and other market participants would have to purchase domestic feedstock first; imports would depend on a shortage validated by the National Energy Secretariat and on the Commission’s annual quotas. MIDA certificates of origin and at least 70% domestic feedstock would be required. The bill provides for minimum reference prices, preferential credit, procurement advantages, conditional tax incentives, training, traceability, and annual purchase reports. Noncompliance could result in suspended incentives, financial penalties, and disqualification from state programs.

Article 6 changes the Commission’s membership and functions by adding representatives of public bodies, sugar mills, agricultural settlers or farmers, and cooperatives. The General Energy Secretariat (Secretaría General de Energía) would coordinate its records. The Authority for Consumer Protection and Defense of Competition (Autoridad de Protección al Consumidor y Defensa de la Competencia, ACODECO) would report on prices; in the event of a substantial increase, the National Energy Secretariat could temporarily suspend blended gasoline, subject to Commission review within 15 calendar days. Articles 7 and 8 provide mechanisms for Panamanian investors, registration of beneficiaries under Law 54 of July 22, 1998 within 1 year, and 15 years of protection, as well as consultations with participants and experts. The text mentions Article 27 of Law 42 of April 20, 2011, reinstated by Law 355 of January 11, 2023.

Article 9 makes the use of agricultural or animal inputs conditional on the food supply and allows limits or reserves to be established with advice from the Ministry of Health (Ministerio de Salud). Article 10 schedules blends of 5%, 7%, and 10% from the specified dates, starting in Panama Province as far as the Chagres River and the other boundaries described, and in La Chorrera and Arraiján in Panamá Oeste Province, before extending throughout Panama. The General Energy Secretariat would make the beneficiary registry available within 2 months of promulgation. Articles 11 and 12 set out the amendments and provide for entry into force on the day after promulgation in the Official Gazette, repealing conflicting provisions. Based on its content, the draft bill concerns energy, agricultural, environmental, commercial, health, cooperative, and consumer protection authorities, as well as sugar mills, agricultural producers, importers, distributors, and investors in the energy sector.