A public-private partnership (PPP) in Panama is a long-term contract between a public entity and a private company to design, build, finance, operate and maintain infrastructure or a public service, with risk shared between both sides. The regime sits in Law 93 of September 19, 2019, published in Official Gazette 28864-B, and in its regulation, Executive Decree 840 of December 31, 2020. Three rules govern any investment decision: the project must be worth at least fifteen million balboas, the contract cannot exceed thirty years extendable by up to ten more, and the initiative always comes from the State, never from the investor.
What a PPP is under Law 93 of 2019
Article 3 defines a PPP as a long-term contract in which the private contractor takes on, wholly or partly, the financing of construction, operation and maintenance of the public asset, together with the project risks. This is not a job paid against progress: the contract sets service levels, and payment can be tied to meeting them.
Article 5 splits PPPs by who pays. Self-financed projects recover their costs through tariffs, tolls or charges billed to the end user. Co-financed projects require State resources, as transfers, guarantees or both. Article 6 also prohibits a PPP contract below fifteen million balboas (B/.15,000,000.00), with municipalities as the only exception.
Which entities and sectors are covered
Article 2 applies the regime to the Central Government, to autonomous and semi-autonomous entities of the Non-Financial Public Sector, to municipalities, and to commercial companies in which the State holds at least 51 % of the share capital. It excludes, among others, the Panama Canal Authority, the Social Security Fund and IDAAN, and it carves out public security, medical health services, official education and metallic mineral extraction concessions.
Under article 7, projects can only originate from public initiative and must appear in the Five-Year Investment Plan or on the list drawn up by the Cabinet Council. Article 18 adds a fiscal ceiling: no new projects are authorized when the accumulated firm and contingent commitments of the Non-Financial Public Sector exceed 7 % of gross domestic product.
Who approves a PPP project
The governing body under article 10 is made up of the ministers of the Presidency, of Economy and Finance, of Public Works, of Commerce and Industry and of Foreign Affairs, plus the Comptroller General with voice but no vote. The National PPP Secretariat (article 12), attached to the Ministry of the Presidency, acts as its technical support unit.
To be eligible, a project needs the technical report required by article 27: social analysis, cost-benefit analysis, risk allocation proposal, feasibility study and preliminary environmental assessment.
The tender and the contract
On anything Law 93 does not expressly regulate, article 28 defers to Law 22 of 2006 on public procurement. The procedure in article 37 runs in two stages: the call for bids is published no less than thirty business days before proposals are due, the technical proposal is first assessed on a “pass / fail” basis, and only then are the economic proposals opened.
Article 39 requires the awardee to incorporate a special purpose company in Panama, which becomes the holder of the contract. In co-financed PPPs the funds are administered through a Panamanian trust whose trustee must hold a license from the Superintendency of Banks under Law 21 of 2017.
| Parameter | Rule | Legal basis |
|---|---|---|
| Minimum project value | B/.15,000,000.00 | Article 6 |
| Project origin | Public initiative only | Article 7 |
| Maximum term | 30 years, extendable by up to 10 | Article 65 |
| Start of the term | Endorsement by the Comptroller General | Article 65 |
| Overall fiscal cap | 7 % of gross domestic product | Article 18 |
| Contracting vehicle | Special purpose company | Article 39 |
What the law firm does at each stage
Article 38 requires twenty-one minimum elements in the contract: the risk allocation matrix, service levels and the dispute resolution mechanism, among others. That is where the work of our public-private partnership lawyers in Panama is concentrated.
- Legal structuring: negotiating a balanced allocation of risk and verifying environmental, labor and regulatory compliance.
- Risk mitigation: anticipating regulatory change and supervening acts, and negotiating force majeure and compensation clauses.
- Financing and security: structuring the trust, the bonds under article 42 and lender rights, including the special pledge over the contract (article 82).
- Running the process: preparing the bid and reviewing the tender documents. Experience in government contracts and procurement in Panama applies here, because Law 22 of 2006 operates on a supplementary basis.
How disputes are resolved
Article 76 requires a direct negotiation stage. If it fails, disagreements go to a technical panel, which issues a non-binding recommendation within thirty calendar days (article 77), or straight to arbitration. Under article 78 the law governing the arbitration is Panamanian, the seat is Panama City and the language is Spanish. For a US or Canadian sponsor that is a material point, and it is worth settling during negotiation with international arbitration lawyers in Panama.
Frequently asked questions
Can a private investor propose a PPP project?
Not under Law 93 of 2019. Article 7 requires projects to originate from public initiative and to appear in the Five-Year Investment Plan or on the Cabinet Council list.
How long can a PPP contract run?
Article 65 sets a maximum of thirty years, extendable by up to ten more, and allows up to five additional years for delays attributable to the public entity. The term starts running from the endorsement of the contract by the Comptroller General of the Republic.
What about concessions predating Law 93?
Article 87 provides that any public works concession contract perfected before the law was promulgated continues to be governed by the rules in force at that time.
Is the 2020 regulation still the one that applies?
It remains in force, but amended. According to the National PPP Secretariat, it is amended by Executive Decree 119 of April 27, 2023 and Executive Decree 58 of June 26, 2025.
In short
Panama’s PPP regime is tightly drawn: a floor of fifteen million balboas, public initiative only, ministerial-level approval, a two-stage tender, a mandatory special purpose company and arbitration seated in Panama. Each of those rules turns into contract decisions that are made once and last for decades. If you are considering a project under Law 93 of 2019, talk to our PPP team in Panama before committing capital.