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Panama Canal Authority Discusses Expansion Progress

by Mike Godfrey, Tax-News.com, Washington

27 June 2007


The Panama Canal Authority (ACP) Board of Directors and Advisory Board met in Shanghai earlier this month, to analyze the progress of expansion and other major projects underway at the Panama Canal. China is reported to be the second largest user of the Panama Canal after the United States.

ACP Administrator and CEO Alberto Alemán Zubieta briefed the Advisory Board - composed of business, maritime and trade experts - on key Canal issues, while the groups discussed strategy and current trends in the maritime and shipping industries. The meeting was jointly presided over by Panamanian Minister for Canal Affairs and ACP Board of Directors Chairman, Dani Ariel Kuzniecky and Advisory Board Chairman and former Secretary-General of the International Maritime Organization, William A. O'Neil.

Since the October 22, 2006 referendum that approved the waterway's expansion, the ACP has: assembled an experienced internal team to manage the historic undertaking; hired legal and financial advisors; hosted various conferences to communicate to potential contractors the essential details on the project; and, released some preliminary tenders, such as the tender for the program manager and the tender for the north Pacific channel dry excavation.

Expansion will build a new lane of traffic along the Panama Canal through the construction of a new set of locks, which will double capacity and allow more traffic and wider ships.

"This is one of the most exciting times for Panama and the Panama Canal. As we strive to run the Canal as a business - responsible to its customers and shareholders - these meetings provide invaluable insight, dialogue and idea creation. Over the past several years, this group of industry experts has helped us make major decisions. Now, as we run the existing Canal and move forward with expansion, their advice and counsel are of even greater importance," explained Mr. Alemán.

Also discussed at the meeting was the growing value of the "All-Water Route," the route from Asia to the US East Coast via the Panama Canal and back. Additionally, members toured the Yanzhang Port, which is the largest cargo port and one of the busiest ports in the world.

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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