May 21, 2026 marked a milestone for Panama’s road infrastructure: the order to proceed was formally issued for the Rehabilitation, Improvement, and Maintenance Project of the Western Pan-American Highway — the second Public-Private Partnership (PPP) implemented under the framework established by Law No. 93 of 2019.
The project, awarded to the consortium Vías del Istmo, S.A., covers approximately 192 kilometers along one of the country’s most strategic road corridors, with an investment of B/.312 million and a 20-year contract encompassing pre-construction, construction, operation, and maintenance phases.
LOVILL served as local legal advisor as part of the multidisciplinary structuring team, supporting the legal aspects of the project from feasibility phase through the structuring, bidding, and execution of the PPP Contract. Isabel Cristina López, founding partner at LOVILL, and José De Gracia Domínguez, associate, attended the official ceremony on May 21.
A Project in Two Strategic Sections
The Western Pan-American Highway connects Panama’s western provinces with the country’s central region through a corridor that concentrates freight traffic, regional logistics, and community mobility along its entire length. The project is structured in two sections:
Section 1: Loma Campana to Penonomé, approximately 91 kilometers.
Section 2: Penonomé to Santiago, an additional 101 kilometers.
Works include road safety improvements, signage, the construction of turnarounds in key communities, weigh stations, video surveillance systems, and bus stops with rest bays.
The project includes a pre-construction phase, approximately three years of construction, followed by the operation and maintenance of the highway under performance standards for the remainder of the 20-year concession term.
The project is expected to generate significant benefits, including more than 2,000 direct jobs and 3,000 indirect jobs during execution, direct benefits for over 282,000 people, and improved connectivity for more than 2 million road users.
The Legal Framework Behind the Project
PPPs in Panama are governed by Law No. 93 of September 19, 2019, which established the Public-Private Partnership Regime, regulated by Executive Decree No. 840 of 2020. This framework defines the mechanisms through which the State and a private operator collaborate on the financing, construction, operation, and maintenance of public infrastructure — distributing risks under contractually defined parameters and linking payment to the performance and availability of the asset.
The country’s first PPP under this framework closed in April 2024. The Western Pan-American Highway is therefore the second project to reach the execution phase — making each of these processes a valuable source of accumulated experience for the future development of the scheme in Panama.
The Legal Role in PPP Structuring
The scope of legal work in PPP projects covers:
- Legal structuring of the PPP contract and risk allocation between the State and the private operator.
- Regulatory analysis and verification of alignment with Law No. 93 of 2019 and applicable international standards.
- Contract drafting and review across the feasibility, bidding, and contracting phases.
- Legal support throughout the preparation of the Final Technical Report and through contract signing.
PPP projects require legal counsel that goes well beyond regulatory knowledge. They involve bankability analysis for international financiers, coordination within multidisciplinary technical and financial teams, and experience in high-complexity public procurement and long-term concession contracts. This legal work begins long before construction starts.
The Western Pan-American Highway as a National Logistics Axis
Beyond its road dimension, the Western Pan-American Highway is a logistics artery connecting Panama with Central America and supporting the movement of freight to and from the interior. Its modernization under a PPP scheme — with permanent maintenance tied to performance standards — represents a structural shift from traditional public works models, where investment in construction did not always come with an equivalent long-term commitment to operation and maintenance.
Panama’s PPP Model: Building on Experience
With this second project now in execution, Panama continues to build on a framework that is still relatively new. Law No. 93 of 2019 established the legal foundation; the first projects to close and reach execution are building the practical experience — legal, financial, and technical — that will be the most valuable asset for the processes ahead.
For companies, investors, and international financiers with an interest in the Panamanian market, working with advisors who have actively participated in the structuring of these first projects provides valuable insight into the regulatory framework, institutional processes, and practical dynamics of the local PPP market.
