Bill 443.

Summary.

The bill amends Law 42 of April 20, 2011, assigning the National Energy Secretariat (Secretaria Nacional de Energía) responsibility for issuing permits to produce, store, transport, market, and introduce biofuels into Fuel Free Zones, in accordance with Cabinet Decree No. 36 of September 17, 2003. It establishes two (2) permits. The Anhydrous Bioethanol Production Plant Permit would authorize individuals or legal entities that develop facilities to produce bioethanol from domestic raw materials to carry out those activities. The Anhydrous Bioethanol User Permit in Fuel Free Zones would allow the introduction of foreign bioethanol when domestic production does not fully meet national demand during implementation of the program. Regulations and other applicable provisions would set the requirements, obligations, and duration of both permits.

The bill authorizes anhydrous bioethanol as a mandatory oxygenating additive at 10% in gasoline blends in the Republic of Panama. It gives purchasing priority to bioethanol made from domestic raw materials over foreign supplies. Fuel importer-distributors would have to purchase all such domestic production when it meets applicable technical and quality requirements. The National Energy Secretariat would set the implementation date for the Biofuels Program.

To coordinate implementation, the bill creates a commission comprising the heads of the authorities responsible for energy, commerce and industry, agricultural development, economy and finance, and the environment. It would assess the land area needed to obtain domestic raw materials of animal or plant origin, their industrial processing and supply to the national market, domestic and foreign bioethanol prices, their local effects, and matters involving distribution and consumers. The commission would approve monitoring procedures, which the National Energy Secretariat would formalize through resolutions according to their technical and regulatory feasibility. Regulations would establish the commission’s functions, and the commission would approve its internal rules. The bill excludes alcohol intended for liquor, medicinal uses or products, and industrial goods from Law 42 of 2011.

The amendment to paragraph 1 of Article 1057-G of the Tax Code (Código Fiscal) sets the fuel consumption tax according to where blending occurs, the biofuel involved, and its origin. Fuel blended in the Republic of Panama with domestic or foreign bioethanol would be taxed at sixty hundredths (B/.0.60) per gallon; fuel arriving already formulated with foreign bioethanol, at three balboas and seventy-eight hundredths (B/.3.78). Fuel blended domestically with domestic or foreign biodiesel would be taxed at twenty-five hundredths (B/.0.25); fuel arriving formulated with foreign biodiesel, at one balboa and fifty-eight hundredths (B/.l.58) per gallon. The bill also provides legal stability for up to fifteen (15) years for price formula components related to bioethanol in gasoline blends, with the applicable period set by regulation. Most provisions would take effect the day after promulgation; the tax amendment would take effect thirty (30) business days afterward.

The proposal concerns the National Energy Secretariat and the commerce, agriculture, finance, and environmental authorities, as well as raw material producers, biofuel plants, fuel importer-distributors, Fuel Free Zones, and fuel consumers in the Republic of Panama.