In the 1990s, the National Government decided to carry out a comprehensive reform of the electricity sector. To this end, it enacted the Law of January 26th, 1996 (Law 26), which created the ten-called Regulator of Public Services, an entity in charge, as its name implies, of regulating the telecommunications, potable water, and electricity sectors.
Likewise, one year later, the Government promulgated Law 6 of February 3rd, 1997, which contained the Regulatory and Institutional Framework for the Provision of Public Electricity Services (Law 6). The Law established the regime under which the activities of generation, transmission, distribution, and commercialization of electric energy intended for the provision of a public electricity service should be governed, as well as the regulatory and coordinating activities involved in planning the expansion and integrated operation of the nationally interconnected system, and its economic regulation and monitoring. In this context, the state started to play the role of governing body.
One of the most relevant elements in the process of transformation of the electricity sector is competition, and so investment must be promoted and encouraged. Investment, the so-called driver of industry needs to have legal conditions to protect it, especially in this region where, according to many investors, the conditions for stable legal security are far from existing.
For a law to be promulgated and guarantee stability and generate an environment of confidence in its content, it must be clear and precede the act or situation to which it is intended to be applied. This has been stated repeatedly by the jurisprudence of the Supreme Court of Justice (see the ruling of September 21, 2006 and the sentence of December 11, 2008). We believe that measures to ensure the legal stability of investments in Panama have been taken via Law 54 of July 22, 1998, published in Official Gazette 23,593 of July 24, 1998.
Originally published by International Financial Law Review.
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