Cost Overrun Hits Panama Canal Expansion
Widening the Panama Canal will cost more than budgeted due to billions of dollars in overruns by the consortium carrying out the work says a report from AFP.
The canal's administrator Grupo Unidos por el Canal (GUPC), which is overseeing upgrades to the canal's locks, has incurred overruns totaling as $2.39 billion. The expansion had been forecast to cost $5.25 billion.
The expansion project, begun in 2007, was initially scheduled for completion in 2014. But the project's due date has been pushed back to early 2016. The project has already been plagued by delays, strikes and bitter disputes over cost overruns with the consortium
The expansion project consists of a new lane for shipping traffic that will have a total of 16 floodgates, eight on the Pacific Ocean side and eight on the Atlantic side. The added lane is expected to double the shipping capacity of the 100-year-old waterway to accommodate today's larger container carriers.
Panama transshipment activity is expected to jump by double digits after the new Panama Canal locks open in 2016 and will be followed by longer-term annual growth of about 5 percent, Drewry Maritime Research said.
Such a growth pattern would increase Panama’s Pacific transshipments and gateway cargo to about 6 million 20-foot-equivalent units in 2014, Drewry said. Panama’s Pacific terminals now handle about 3.4 million TEUs a year, including some 3.1 million TEUs of transshipments.
