First Panama Canal Extension Tender Released

by Leroy Baker, Tax-News.com, New York

25 May 2007

The Panama Canal Authority (ACP) took a step closer towards beginning the Canal's historic expansion with the release of the first construction project tender earlier this month.

The Expansion Program adds a new lane of traffic along the Panama Canal through the construction of a new set of locks, which will double tonnage capacity and allow the transit of substantially larger vessels. The first phase of the expansion will involve dry excavation along the north access channel on the Pacific end of the Canal.

The North Pacific channel excavation, which will be located west of Pedro Miguel and locks, is the first of five dry excavation projects that will help link the new Post-Panamax Locks on the Pacific end of the Canal to the existing Gaillard Cut, and represents approximately 16% of the total excavation for the new Pacific Locks Access Channel.

The scope of work under the contract will include: the removal of non-classified material and disposal of excavated material at indicated locations, and the construction of new gravel roads and ditches.

"We are making history with the release of the first construction project tender," declared ACP Engineering and Programs Management Director Jorge L. Quijano.

"We hope to attract firms with significant experience in this type of work as we begin this important phase of the project," he added.

The ACP is the autonomous agency of the Government of Panama in charge of managing, operating and maintaining the Panama Canal. The operation of the ACP is based on its organic law and the regulations approved by its Board of Directors.

Despite its age and capacity constraints, the Panama Canal remains a vital link for shipping destined for US east coast ports from the west coast of the Americas and Asia Pacific. Figures released in March by the ACP for Q1 of fiscal year 2007, showed increases in net tonnage, total transits and transits of supers (vessels 91 feet or more in beam). Tonnage increased 11.7% – to 79.9 million PC/UMS tons from 71.5 million PC/UMS tons. Total canal transits increased 8% – to 3,568 transits from 3,299. Moreover, transits of supers, or larger ships that require greater time and navigation skills to transit the Canal, increased 14.6% – to 1,968 transits from 1,718.

The government says that its receipts from the all-important canal rose in 2006 by 200m Balboas by comparison with the previous year. Panama's finances will be dominated for years to come by the proposed expansion of the canal, expected to cost US$5.25 billion, with construction scheduled to be completed in 2014.

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