public sector enterprises and the state ownership function in panama september 2011 n.
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Public Sector Enterprises and the State Ownership Function in Panama September 2011

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Public Sector Enterprises and the State Ownership Function in Panama September 2011. Economic Performance. 2002-09 Share of GDP (% total). Source: Instituto Nacional de Estadistica. Source: INDESA.

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economic performance
Economic Performance

2002-09 Share of GDP (% total)

Source: Instituto Nacional de Estadistica

Source: INDESA

Panama achieved Investment Grade status from the three major rating agencies between March and June of 2010. Since that time, Panama has continued on a path of growth and development.

economic performance1
Economic Performance

Better economic performance contributes growth of trade activity and decreasing in the unemployment rate, since it stimulates new jobs.

Source: Instituto Nacional de Estadistica y Censo

economic performance2
Economic Performance

Foreign direct investment (FDI) remains one of Panama´s main driver for growth.

FDI inflows reached US$1.7 billion in 2009, or 7.2%

  • The program to privatize State-owned was launched to increase enterprise
  • efficiency and production capacity.
  • A framework law was adopted to regulate the process and a Privatization Office
  • (PROPRIVAT) under the Ministry of Economy and Finance.
  • During this period, only small enterprises such COBANA, COBAPA, Citricos de
  • Chiriquí and Cemento Bayano.


  • In June, the sale of 49% of the share of the National Telecommunications Institute
  • (INTEL) to UK company Cable & Wireless concluded.
  • The Hydraulic Resources and Electrification Institute (IRHE) was divided into 4
  • generating, 3 distribution and one transmission company. State, through
  • COMVA, sold 49%-51% of stake from generating and distribution companies. The
  • GOP retained control of the transmission company (ETESA).
  • Privatization also encompassed the port sector, the ports of Balboa and Cristobal
  • were transferred to Panama Ports Company under a concession, where Stake
  • keeps 10% of state.



  • Tocumen International Airport was converted into an autonomous company, but the
  • shares continued to belong to the GOP.


  • GOP established an electricity-generating company as a public enterprises.


Established in September 2009.

New projects and actions are taken in order to improve the governance in the PPP, as the Code of Conduct and supporting of DICRE assists the Directors (GOP) with information and replace them, when they are not available, to assist to BOD through a proxy.

public sector enterprises
Public Sector Enterprises

Government of Panama (GOP) is shareholder in several companies and sector industries.

Government of Panama


100% of stake


Infrastructure, utilities, toll roads and others


50% or less stake


Utilities, pipeline, telecom and ports



public sector enterprises1
Public Sector Enterprises

Responsibility for the determination of strategic goals depends on the level of ownership.


  • Administration Staff and Board of Directors (BOD).
  • BOD are appointed by Government.
  • Both manage and determine the strategic goals.
  • Both coordinate with government officer and Ministry of Economics and Finance (
  • MEF) all new sensitive actions programs.


  • Operator or partner companies are in charge of the management.
  • Strategic planning, Budgets and important decisions require approval of the BOD.
  • Government is represented by two members in BOD and a representative from
  • DICRE, this last one has right to speak.

Management Team is responsible for achieving their goals, in both kinds of companies.

public sector enterprises2
Public Sector Enterprises

Coordinating strategic planning between enterprises and policy makers.

Management and BOD

GoP regulation offices & MEF


  • Manage the company.
  • Set strategic plans according to best
  • practices of corporate governance.
  • Regulated field has to inform to
  • governmental office.
  • Keep open communication with MEF
  • authorities.



  • Directors
  • 3 from Int’l Operator
  • 2 from GOP


  • Manage the company.
  • Set strategic plans
  • according to best practices
  • of corporate governance.
  • Present strategic plan to
  • BOD.
  • Approve plan strategic
  • and other issues, that
  • establish incorporation
  • deed.
public sector enterprises3
Public Sector Enterprises

Balance between commercial and non-commercial objectives.



  • Set goals on a balance of commercial and non-commercial
  • objectives are carried with no major difficulties.
  • Both objective can be decided by one part.


  • It is harder but achievable to reach an agreement on
  • sensitive matters like balance of objective, but always both
  • parties have been able to arrive at consensus.
public sector enterprises4
Public Sector Enterprises

Privatization strategy and implementation

MEF is responsible office of privatizations

COMVA established FDD

COMVA lead privatizationprocess

COMVA sold share of utilities companies

MEF created COMVA

Currently, MEF doesn’t have a program or strategy to privatize other companies or services, so far.

Privatization Process


public sector enterprises5
Public Sector Enterprises

Private-public dialogue is through DICRE and government’s directors in each company.


Directors from GOP

Board of Directors

Management Team

public sector enterprises6
Public Sector Enterprises

Representing the state interest, modalities and responsibility for governance PSE

Directors are appointed by GOP



DICRE assists government directors with reports, analysis and evaluations so the positions adopted are well informed and discussed.

Besides, DICRE is in charge of the coordination with each company, representing the State interest as shareholder, and given that they are in different industries, there are different regulators and control offices, which are in direct and constant communication with each PSE, including Ministries and Authorities.

MEF created in Sept. 2009

government as shareholders
Government as shareholders
  • The Government owns 100% of stakes of some companies and participates in their BOD.

Net Income 2010: $963.9M

100% GOP’s stake

Net Income 2010: $0.25M

100% GOP’s stake

Net Income 2010: $59.1M

100% GOP’s stake

Net Income 2010: $11.7M

100% GOP’s stake

  • During 2010, these companies have contributed to National Treasury in $845 millions approximate.
government as shareholders in private sector
Government as shareholders in private sector
  • The Government evaluates the possibilities to consolidate its shareholding in public companies private.

EBITDA 2010: $108.4M

48% GOP’s stake


EBITDA 2010: $99.7M

Value: $300M according to Citi

49.9% GOP’s stake

EBITDA 2010P: $272.3M

Value: $742M according to Goldman Sachs

49% GOP’s stakes

EBITDA 2010: $58.8M

48.25% GOP’s stake

EBITDA 2010: $15.9M

50% GOP’s stake

EBITDA 2009: $7.5M

49% GOP’s stake

EBITDA 2009: $105.6M

10% GOP’s stake

EBITDA 2009P: $113.4M

50.5% GOP’s stake

  • According to EBITDA multiples (5 to 8x) the Government position value in these enterprises is between US$ 1,634 millions and US$ 2,614 millions approximate.
  • MEF, throughState’s Investment, Concessions and Risk Office (DICRE), is planning a strategy in order to maximize the government stakes value.
  • GOP is evaluating an effective way to consolidate and maximize its stakes, through a Sovereign Wealth Fund.