HOUSTON/PANAMA CITY – Panama's government expects to receive by June a proposal by mining firm First Quantum Minerals 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 the nation'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.

US Special Envoy for Climate John Kerry will participate in the fifth ministerial meeting of the Energy and Climate Partnership of the Americas (ECPA) later 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.

KICKING OFF
Another piece of Panama's clean energy agenda is a natural gas-fueled 670-MW 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.