Panama Canal development project on pace for completion
Patrick Burnson, Executive Editor, and Jeff Berman, Group News Editor -- Logistics Management, 1/1/2009
PANAMA CITY, Panama — While continuing to adjust its economic forecast, Panama Canal authorities insist the expansion project is on schedule for completion in 2014.
“The big question for all of us is 'when will a demand for carrier capacity be restored?’” said Alberto Alemán Zubieta, administrator and CEO of the Panama Canal Authority (ACP) in an interview with LM. “In any case, we want the project on track and have it provide the industry with a more efficient routing solution.”
The expansion project was initially announced in October 2006, when nearly 80 percent of voters in a national referendum held in Panama voted in favor of expanding the Panama Canal. When completed, the construction project will double the capacity of the increasingly congested waterway to 600 million tons a year and allow it to handle much larger vessels.
The project will include construction of two sets of locks and access channels; a new traffic lane; dredging; and raising the water level in Gatun Lake. Currently, the maximum allowable dimensions for most vessels transiting the canal are 106 feet in width, 965 feet in length, and 39.5 feet of draft (depth).
After the expansion, the canal will accommodate vessels up to 160 feet wide and 1,200 feet long, with a 50-foot draft. The maximum size for container vessels will increase to 12,000 twenty-foot equivalent units (TEUs).
At a press conference last month, Zubieta provided additional insight to Panamanian President Martín Torrijos’ recent $2.3 billion expansion financing structure announcement. And senior leaders of five multilateral and development agencies convened at Panama’s Ascanio Arosemena Theater with Canal officials to sign an agreement.
“The geographic diversity of the offers and the high profiles of the institutions, demonstrate the international market’s trust and confidence in the high-growth performance of the Panamanian economy and the successful management of the Panama Canal,” said Zubieta.
The $2.3 billion financing package will cover a portion of the $5.25 billion total cost, Zubieta added. The negotiated financing structure includes favorable provisions for the ACP, including a 20-year amortizing period with a 10-year grace period and establishes an unsecured, untied financing for the ACP, whereby there are no prerequisites to contract from any one source.
“Meanwhile, our economic advisors are studying trends pointing to a rebound in shipping,” Zubieta told LM. “Our findings suggest a recovery at the end of 2009 or early 2010.”
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