Panama to receive First Quantum's plan for power plant conversion -Energy minister

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HOUSTON/PANAMA CITY, Feb 9 (Reuters) - Panama's government expects to receive soon a proposal by mining firm First Quantum Minerals (FM.TO) to convert a coal-fired power plant to cleaner energy, Energy Minister Jorge Rivera told Reuters on Wednesday.

A unit of the Canadian miner last month agreed to pay higher royalties to Panama as part of contract renegotiations for a flagship copper project. The government now wants the company to cease the use of coal at Panama's only plant left that still burns the fuel for power generation.

The plant conversion could be a milestone in a clean energy plan that Rivera said is on track to cease the use of bunker and coal for power generation by December 2023.

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The new contract with First Quantum has yet to be approved by Panama's Congress and must be signed by both parties. According to negotiated terms, the miner must start technical studies six months after the contract signing. The goal is to implement cleaner energy technologies to replace burning coal at an existing power plant, the energy ministry said.

U.S. Special Envoy for Climate John Kerry will participate in the fifth ministerial meeting of the Energy and Climate Partnership of the Americas (ECPA) this week in Panama, which will focus on the transition to cleaner fuels.

"Our concept is that energy transition must be fair and inclusive, not only focused on the technological aspect," Rivera said.

A global reshuffle of energy supplies this year has cut demand for transit of liquefied natural gas (LNG) vessels through the Panama Canal, with ships making u-turns to Europe from Asia, the waterway's authority said on Wednesday.

But the Canal is facing higher seasonal demand for transit, handling the passage of about 39 ships per day, it said. read more

KICKING OFF

Another piece of Panama's clean energy agenda is a natural gas-fueled 670-megawatt power plant near Colon, a $1 billion project by a consortium between InterEnergy Group, a unit of AES , and the government. The plant began construction last month.

"The plant should start operations between December 2023 and April 2024. That is why we are preparing the decommissioning of other plants by the end of 2023," Rivera said.

Panama, which last year produced 82% of its electricity from renewable sources, is upgrading its legal framework and running price forecasts to encourage cleaner energy sources, including the production of sugarcane-based ethanol and the installation of decentralized power generation plants.

The government also plans to call consulting companies this month for advice on reforming Panama's hydrocarbon law, aimed at updating regulations for downstream projects, the minister said.

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Reporting by Marianna Parraga in Houston and Elida Moreno in Panama City Editing by Gary McWilliams, Matthew Lewis and Grant McCool

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