The legal framework for the electric system in Panama is provided by Law 6 of 1997, and regulated by Decree 22 of 1998.
The Law 6 of 1997, established auctions as the procurement method for distribution companies and established a 5% price score premium on renewable energy sources bidding in auctions. In addition, it established auction of concessions as the mechanism to provide rural electrification in those cases where electrification is other than through grid extension.
The law also sets that direct purchases of renewable electricity (including hydro up to 3MW) have a premium of 5%.
In addition, law 6 of 1997 established a renewable 50-year concession regime for hydropower and geothermal energy, adjudicated via resolution and regulated by Resolution 3460 of 2002.