Panama Canal Details $5.25B Expansion Plans

Tuesday, April 25, 2006
The Chairman of the Panama Canal Authority's (ACP) Board of Directors announced recently its recommendation to build a new lane along the Panama Canal that will double capacity and allow more traffic. This is the result of comprehensive analyses and studies by the ACP. The project is estimated to cost $5.25 billion and will be paid entirely by users of the Canal through a graduated toll system. Dr. Ricaurte Vásquez M., Chairman of the ACP's Board of Directors, submitted the recommendation to President Martín Torrijos at a Town Hall meeting in Panama today. The president will discuss the recommendation with his Cabinet, make a recommendation to the National Assembly, and the process will culminate with the Panamanian people voting in a national referendum.

"Today is an historic moment for the Panamanian people and the global shipping and maritime industry. After several years of analyzing and reviewing hundreds of studies and projections, we are recommending the expansion of the Panama Canal," said Dr. Vásquez. "Our vision is clear - this project will be for the benefit of the people of Panama and world trade. Panama's geographic location is its destiny - we aim to be at the center of global trade and become a great maritime hub. The time is right and the time is now."

ACP Administrator/CEO Alberto Alemán Zubieta added: "Panama has been successful in managing and operating the Canal since the U.S. handover in 1999. We have broken several records and have set the bar high for efficiency, safety and reliability, while at the same time bringing more benefits to our country. At this juncture, we are up to the task to take on Canal expansion, to add more capacity and to ensure reliable service for our customers for decades to come."

The Expansion Project

Expansion would entail the creation of a new lane of traffic along the Canal through the construction of a new set of locks. Environmentally sound water-saving basins will be built alongside the new locks, which will reuse 60 percent of the water in each transit.

This technology eliminates the need for constructing dams, flooding and displacing communities along the Canal's Watershed. This was also in keeping with ACP's adherence to sustainable development and environmental management best practices.

This project will be paid for by Canal customers through a graduated system of tolls. As always, the ACP will consult with customers on the new tolls pricing system and will take into account their specific needs. Potential construction is slated for completion by 2014. All creative means will be employed by the ACP to stretch capacity until the construction is completed. The ACP forecasts that the Canal will reach full capacity by the time the expanded Canal is operational.

Since the handover of the Canal from the United States to Panama on December 31, 1999, the ACP has shifted its operations from a not-for-profit utility to a market-oriented business model - one that is focused on customer service and reliability. Under ACP management, there has been a significant reduction in the time it takes to transit the Canal, an increase in tonnage transiting the waterway and a spike in transits of Panamax-size vessels.

The ACP's Board of Directors has now presented its recommendation to expand the Canal to the President and the Cabinet Council of Panama. If approved by the Cabinet Council, the matter is referred to the National Assembly for approval. The National Assembly will then create a law mandating a referendum, in which the people of Panama will vote on expansion.

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