Building the New Panama Canal

Singapore’s Minister for Foreign Affairs, George Yeo, has backed Panama’s ambitious plans for a major expansion of the Panama Canal.

During a recent visit to Panama he said: “The Panama Canal expansion is important not just for Panama but for the entire (maritime) industry – for the global economy.”

Mr. Yeo travelled to Panama as part of an official delegation, which also included Panamanian Ambassador to Singapore Eduardo Real. Earlier this year, Singapore signed a Free Trade Agreement with Panama.

Foreign Minister Yeo told Minister of Panama Canal Affairs, Dr. Ricaurte Vásquez: “Singapore is a maritime hub. We live on trade. And the more open the world is to free movement of ships, the better it is for Singapore. We hope that you widen the Canal because it is good for the overall system.”

Panamanians will vote on October 22 in a national referendum on the proposed expansion. The project would build a third lane of traffic along the waterway through the construction of a new set of locks, doubling Canal capacity.

The expansion would help maximize Panama’s strategic location to become the great maritime hub of the Americas.

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Source: VIP Panama

The Peruvians have had gold as their natural wealth; the Chileans, copper; and the Venezuelans and Mexicans, petroleum. In our case it has been our geographical position and the Panama Canal.

>This article has been written by a well-known member of the Panama maritime community, Mr. Ruben Karamñites. He is General Manager of Crowley Liner Transport and a leading member of the Panama Chamber of Shipping.

From the year 2000, the Canal is being handled and administered by Panamanians, with responsibility and transparency, with very well calculated and studied risks, without economically committing the future of our generations, on the contrary, serving as the basis for our social and economic development.

The Panama Canal has a tremendous commitment and a great social and economic responsibility to the country as much as it has to continue being projected internationally to the vanguard of development in the maritime world and must walk hand in hand with the demands of the sector. For this reason, it has to keep investing in maintenance and making the necessary modernization changes to the Canal, that would allow it to provide a good service and timely get an economical benefit, in view of the imminent world cargo growth.

The growth of cargo worldwide, the globalization, the consolidation of capitals and the worldwide development of the maritime industry, will keep its dynamics of constant changes and Panama must be ready to offer modern services through the Canal, modern port and Free Zone installations, to satisfy the needs and demands of the users, and the growing demand of the Canal service, otherwise another will offer it.

Consequently, to comply with all this, what is demanded and required is a constant modernization of our maritime resources and the Panama Canal; otherwise another will take the lead.

The International Maritime Community, the international commercial trade and the world in general are watching us, they are waiting to see what will be the position of the Panamanians and they recognize that the Canal has importance in world development and the movement of cargo.

>KEY ARGUMENTS THAT ARE CAUSING CRISIS AND SUPPORT THE URGENT NEED OF IMMEDIATE ENLARGEMENT OF THE CANAL.

>• The Canal structures are now more than 90 years old, and throughout their history they have required large investments for their maintenance and operation.
• The Panama Canal has maintained for years an average daily transit of 38 ships, and as a result of its structural limitations, it has not been able to grow more.
• The Panama Canal continues confronting a problem of service to ships that have to expect an average of 10 days delay in order to transit the Canal, especially during the period of locks maintenance. At some periods the Canal has had up to 119 ships waiting to transit and for this year, the maximum has been 110 ships.
• There are limitations and lack of expansion in certain critical areas for transit that permit a safe flowed of adequate traffic.
• There is a need to improve the lighting in certain areas that help in an effective way to improve the visibility on the Canal route.
• Tie-up stations are urgently needed.
• The Panama Canal at present does not have a real answer in the face of the growing demand of services to satisfy the new business opportunities that present themselves, through the development of the Post-panamax ships.
• There are various countries of the region that are studying alternatives to the Panama Canal and they are directing themselves to the International Community, tending toward improving the offer of the Canal and they are determined to participate in the movement of international cargo from the Atlantic to Pacific and vice versa. Among those that can be mentioned are the United States of America, Mexico and Canada, that are revising their systems of land transport (highways and railroads). It is worth adding that Nicaragua has been promoting the Asian interests that they explore/revise the idea of a canal through Nicaraguan territory, an idea that was born during the colonial era and that has remained in the Nicaraguan mind. On the other hand, Guatemala plans to modernize its system of land transportation (highways and railroad). All these initiatives and innovative projects compete directly with the Panama Canal. If we do not act swiftly and intelligently to protect our resource and the Canal business by improving its service, modernizing it and its installations and developing the project of enlargement of the Canal and to capture the growth of cargo moved on pos-panamax vessels, to offer a better service to its users, otherwise we will end up with the ” star product “ gradually becoming known as a ” product in decline ” .

Concerning the Plan of Disclosure of the Panama Canal Enlargement Project, it is important to take up the subject again in the country, to answer the great number of doubts that exists on this project in many sectors of the Panamanian population!!!. This requires immediate work by an able official:

>• He must adjust the form of the speech to give the Panamanian an adequate and simple explanation, by knowing and identifying the doubts in the different areas of the project.
• Invest in a more massive publicity to give to give more disclosure to the project.
• The project needs to be presented in all the forums and discussions to cover all the objections, even if they are unfavorable to the project or if they seem insignificant, this must be a 24 hours job. Here are some of the objections, which from my point of view, does not represent firm arguments and are easy to clarify and explain to the community, but they are points of view and opinions adversed to the project that have been spread out:

>A. ” It is not the moment to carry out the Project of Enlargement ” .
B. ” One must wait (1) a year more ” . more?
C. ” One must wait 10 to 15 years or more ” , and that ” we only need to develop the projects of modification of the critical areas and to give greater expansion to the waterway.
This is sufficient ” .
D. ” The environmental aspect ” .
E. ” The hydrographic basin will be affected, diminishing the supply of water for the country ” .
F. ” How it is established that the project of enlargement will generate 40,000 jobs? “ and ” How can they assure that it will give jobs to so many Panamanians? ” ” How many will be employed for the work? “
G. ” We believe that the project will cost much more than the amount presented by the Canal; the financing of the project will cause debt problems to the country for the loans that will be requested to the banks; these economic resources from the Canal that will be used to develop the project could better be used to make more roads, homes, and schools for the Panamanians ” .

This Enlargement Project cannot wait, it includes the third set of locks, the modification of the critical areas and the Canal widening. This is the time to do it, becase it is foreseen that for 2014, present Canal will be reaching its maximum capacity and according to the projections of the studies, we are now just in time to begin the enlargement project. We urgently need to increase our offer capacity to capture the growth of the worldwide cargo and to provide a better service to the Canal users. The more the project is delayed, the more expensive it will be, the competitive threads increases and the business opportunities are reduced.

The existence of over 23 environmental and archaeological researches; the derogation of Law No. 44, in which finally the creation of damming to increase the volume of water in the Canal; the projects of water administration; the deepen of the route through dredging, to guarantee the way of the vessels of greater draft, were discarded. The evaluation of this environmental theme is link to the cost benefit of the project for the Panamanian State.

The doubt that exists in the labor area related to the quantity of jobs for Panamanians, is directly related to the satisfaction of their needs and the domino effect that the project will have in the national economy. The expectations could be exceeded, if we do not trained the Panamanian labor force to the future, when the development projects in the construction (hotels, casinos, roads, condominiums, office buildings, etc.) juxtapose with the project of the Canal Enlargement and beware that we are going to end bringing manual or skilled labor to face the job demand (same as it happened during the construction of the Panama Canal in 1904). We all have to be ready for the great quantity of jobs that will arise in all labor areas, both vocational and professional. The Panama Canal Enlargment Project will resolve the home economical needs of all Panamanians, who will have a job. Panamanians only want to see that they will really have a job and will directly receive the economic benefit of their effort. Any other argument exceeds their humble interest.

The project financing, as well as its real impact in the national economy, must be fully clarified and discussed. It is true that the themes have been explained and that we can be sure that the project is self financeable/sustainable, with a projection of conviction to the Panamanians, directed to the human development and to improve the Panamanians quality of life.

If you do not understand the range of the role the Panama Canal must play in the 21 Century for a globalized world, then it is time to know it. The changes that Panama will face after the Referendum of October 22, 2006, are deep and will be at other level, directed to the complete development. This is the most relevant project developed in the Republic of Panama and in all the region, after the construction of the Panama Canal (1904/1914), which will change our future for the benefit of all Panamanians and the International Trade.

” Panama it is your Canal, modernize it ” ” The Enlargement of the Canal will be for your future development ” ” Be prepared for this development “

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Source: VIP Panama

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The ports of the Republic of Panama, the merchant marine, the agencies and shipping lines, the Colon Free Zone, the railroad and many other service suppliers connected with the economic activities of the Panama Canal, are complemented mutually and form the Conglomerate of the Canal.

>This Conglomerate and the Economic System by-product of the operations of the interoceanic waterway contribute more than 20% of the Gross Domestic Product of the country and generate approximately 293,000 direct and indirect jobs.

The Chamber of Shipping of Panama, as an organization that groups together the great majority of the members of the Maritime Sector, sector, which shows the highest indexes of growth in the domestic economy over the past five-year period, after having studied the proposal of enlargement of the Panama Canal and consulting with all its members and national and international clients, considers that the enlargement of the Canal is necessary for the following reasons:

1. The Panama Canal is operating to almost 85% of its maximum capacity, which signifies that in a relatively short time, it will not be able to continue attending efficiently to the growing demand of traffic, a product of the tendencies of growth of international markets,

2. The Panama Canal requires increasingly more frequent cycles of maintenance due to its 96 years of uninterrupted use in the service of world commerce, which at the same time delays in great measure the traffic of ships that use the waterway,

3. The shipping companies, clients of the Panama Canal, are tending to build larger ships (Post-Panamax) for the scale of economic benefits that the same represent, and which currently cannot use the canal,

4. The shipping companies consider that the Panama Canal represents the most dependable and viable route to operate their ships on the Pacific and Atlantic oceans and they understand and accept that the enlargement will involve gradual increases in the anticipated traffic and that the principles of productivity, efficiency, security and cost-benefits that currently exist, will be maintained,

5. We Panamanians have shown great talent and professionalism in administering the canal efficiently since it was transferred back to Panamanian hands. As previously stated, we are convinced that this project, properly executed, will benefit Panama and all Panamanians equally, and we support firmly the proposal of enlargement of the Panama Canal.

>Julio De La Lastra, President, Panama Chamber of Shipping, signed in Panama on the 20th of August 2006

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Canal Expansion (Source) Oct 19 – Panamanians vote in a referendum on Sunday on whether to approve an ambitious $5.25-billion plan to expand the famous Panama Canal waterway to allow it to handle larger cargo ships. Here are some facts about the canal.

* When opened in 1914, the canal was the single most expensive project ever undertaken by the United States at a cost of $375 million, four times the price of the Suez Canal. France had started building the waterway in the 19th century but gave up after its project went bankrupt.

* France’s Paul Gauguin, one of the leading painters of the post-impressionist period, helped to dig the Panama Canal as a laborer briefly. But he found the work tough and he left the country after he was arrested for urinating in public. From 1891 he lived in Tahiti and elsewhere in the South Pacific.

Rosetta Stone

* The planned expansion entails building new locks that will measure 1,400 feet (427 meters) long and 180 feet (55 meters) wide — 40 percent longer and 64 percent wider than existing ones. If laid on end, these canal chambers would stand taller than the 102-floor Empire State Building in New York.

* Tropical diseases such as typhoid, malaria and yellow fever killed more than 25,000 canal workers during the original construction. However, this prompted leaps in modern medicine as doctors discovered that malaria was transmitted by mosquitoes, and not as earlier thought by “miasma” — polluted air dense with decaying matter.

* The amount of rock and soil removed from the ground to create the canal was enormous. Material from one nine-mile (15 km) section, known as the Gaillard Cut, would have been sufficient to form a wall, of a similar size to the Great Wall of China, to span from San Francisco to New York. ADVERTISEMENT

* Ships passing through the canal pay tolls. Canal authorities even charged U.S. adventurer Richard Halliburton to swim the 50-mile-long (80-km) canal in 1928. It was the lowest ever toll charged at $0.36.

* If the expansion is approved, the Panama Canal Authority that runs the waterway says contributions to federal government coffers will skyrocket. By 2025, the canal will provide $4.25 billion per year to the government, an almost tenfold increase from current levels.

SOURCE: Don Winner @ Panama-guide.com

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Source: VIP Panama

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Wide load: the Panama Canal, running at almost full capacity, considers a major expansion projectLatin Trade, April, 2006 by Marisol RuedaFind More Results for: “free articles online “Free online medical…OneOnOne Computer…Opening The Gateway; a…Editorial | N.J. Free…

One of the biggest impacts of globalization has been the disappearance of borders among many countries, the product of an explosion in global trade. On the high seas, maritime trade is feeling the winds of change, and Latin America is no exception.

Congestion at the Port of Los Angeles–the result of a rising flood of U.S.-bound Asian goods–is fueling the need for new maritime routes. Other ports in the region are jumping at the chance to take in more Asian goods. The Panama Canal, which moves 4% of the world’s commerce, doesn’t want to miss out on this trend. After 92 years since its birth and only seven years under the control of the Panamanian government, the canal faces the challenge of building a third lock that would move ships across the country The waterway now operates at 93% of capacity.

The issue has stirred up a great deal of controversy in maritime circles. There’s the cost issue; whether expansion is really needed at all; and the question of whether the construction might damage the environment. Panamanian voters will make the final decision in the referendum scheduled some time between now and 2007, as required by law. Beforehand, the Panama Canal Authority (PCA) will deliver a recommendation to its board of directors which, if approved, will go before the government, which later would put a final draft before Congress.Advertisement

“Construction is needed urgently, not only for Panama, but for all the canal’s users, because throughout its history it has helped so many countries’ economies,” says Rodolfo R. Sabonge, director of corporate planning and marketing for the canal authority. “Expansion is the tool needed for sustained economic development in any nation involved in the global economy, as well as for our country, given that our maritime business created 2,000 jobs in 2004.”

At least 15% of U.S. foreign trade travels through the 80-kilometer long marine artery (China and Japan are close behind.) According to the PCA, using the canal generates costs savings of up to 20% when compared to alternative trade lanes. Robin Lanier, director of the Waterfront Coalition, a U.S. lobbyist, recently told reporters that U.S. economic prosperity depends on the canal’s expansion. Sabonge says, “Countries like the United States grew under the canal’s shadow, which allowed it to import and export products at very competitive prices.”

The bulk of the canal’s business comes from shipping traffic between the U.S. East Coast and the Far East. Trade between Europe and the U.S. West Coast and Canada is the canal’s second-largest source of income. Before Panamanians vote on a referendum, the PCA wants the public to be fully aware of what expansion entails, with no room for surprises. The port authority has spearheaded more than 130 studies covering legal, financial, environmental and technical topics, among others. “Fears arise always over the matter of cost. How it will be paid, if it will mean debt to the nation, and its environmental impact,” says Sabonge.

A recent study compiled by the consulting firm Global Insight puts the project’s cost at US$6 billion. Building a new lock would take nine years–including both the planning and construction phases. Some estimates put the cost as high as $10 billion. The PCA isn’t taking that figure seriously and is foregoing any talk about numbers for the moment. “We will not make these figures public because so far they are just speculations, but the project would cost a lot less than $10 billion,” says Sabonge. Nor does the authority want to comment on financing. “There are still details that we will not reveal because we have to report them internally in Panama, but I can guarantee that the project is extremely feasible from a financial point of view,” says Sabonge.

If the project goes ahead, development costs should not soak up profits from otherwise existing business, maritime analysts say. “According to how it was originally suggested, the business that the new lock would generate would cover its own debts,” says Ruben Reyna, a former administrator of the Maritime Authority of Panama and president of International Mar Consult, a Panama City consultancy. “Either with financial entities or with collaborators willing to become partners, there are many options to consider. The third lock should be totally and absolutely self-financed, with no subsidies coming from the existing canal.” There is no doubt that the Panama Canal is a lifeline for the Central American country. Last year, the canal brought in $1.10 billion in revenue, a figure estimated to climb to $1.25 billion this year.

If the extension fails to go forward, many shipping companies would rely on alternate routes, such as the Suez Canal; hence, Panama would lose out on new shipping revenue, analysts says. Even so, Panamanians know their route is irreplaceable. “Ships travel through Panama because they need to. If that’s the case, I think it’s absurd to go through the Suez,” Reyna says.

Even with toll hikes that could come with the construction of a third lock, the PCA insists that shipping companies would save money by going in quickly through a third lock. Currently, the cost per container that passes through the canal is $49 and, by 2007, the figure will climb to $54. The PCA has yet to determine the amount it might charge once the canal’s capacity expands, but many shipping companies are eagerly awaiting a number because any increases could affect cost structures. Global Insight suggests that the tolls could double over a decade because of the construction.

Expansion. Part of the debate revolves around the need for expansion at all. There are not that many post-panamax ships in existence–defined as having a beam of more than 32 meters and 295 meters in length and which are, subsequently, too large to use the canal in its present form. Some experts say there are post-panamax ships under construction, but they are built for specific routes, and the Panama Canal is not one of them.

“When the Panama Canal was built, current ships did not exist” says Antonio Marinetto Bald, an industry consultant. “These kinds of projects are not the product of yearly shipyard assignments but to the growth of the global transportation sector.”Advertisement

The growth of the shipping industry could increase the number of post-panamax ships over the next decade–the same amount of time it will take to build a third lock. “The third lock will attract a greater number of ships, and the current set of locks would continue to work at maximum capacity,” says Rogelio Orillac, director of ports at the Maritime Authority of Panama. “I think there will be enough post-panamax ships to go across Panama by the end of construction.”

MARISOL RUEDA * MEXICO CITY

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Source: VIP Panama

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The expansion of Panama Canal By: Marcus Laval

Nearly thirty years ago, General Omar Torrijos signed with the United States a treaty leading on January 1, 2000 to the return to Panama of the sovereignty on Panama Canal. At the time of a national referendum, another page of this saga came to be turned: by 78 % of the voices, but with a participation lower than 44 %, the Panamanians indeed gave their agreement to a project of expansion without precedent since the Canal was opened, in 1914.

For president Martin Torrijos, the son of Omar, it is indeed a “historical” project, whose centre piece will be the construction of a third set of locks. 427 meters long and 55 meters broad, it will allow the transit of the famous “post-Panamax”, cargo liners too big to use the current infrastructures. However, this 5,25 billion dollars titanic work did not achieve unanimity. For the detractors of the project, the expansion of the Canal is at the same time likely to push the country to high debt, to degrade the environment, while being of no help to the 40 % of the Panamanians living in poverty. This decision is a hard blow for Nicaragua which had announced a few weeks before an interoceanic plan of a Canal through its territory, estimated at 18 billion dollars.

The large ships owners, on the other hand, are happy with ‘yes’ at referendum. The saturation of the Panama Canal, driving 5 % of the world maritime trade, was announced to take place between 2009 and 2012. As for the increase in tolls (+ 3,5 % per annum over 20 years) intended to finance this expansion, it is regarded as a less evil. Some experts say that a congested Canal would cost Panama more because it would have to lower transit tolls.

The building site, which will be spread out over eight years, has finally aroused the interest of the leaders in engineering. The Panamanian authorities retained the concept of locks suggested by Tractebel Development Engineering (Suez group) and the national Company of the Rhone. But Bouygues, Alstom ,Vinci and Eiffage, in fact the great French groups – and of course international – are also interested by the Panamanian market, the largest building site which will be subjected to an international tender, probably in spring 2007.

The benefits generated by the Canal, which brought to the State 500 million dollars in 2005, explains in great part the interest which is not limited to the maritime sector only. Panama, the second Latin-American country in term of foreign investments per capita, profited from capital contributions of 8 billion dollars since 1995. And the forecasts for the ten next years are even more optimistic: in addition to the Canal, a 300 million dollars port is in project, close to entry of the channel, without forgetting the cleansing of Panama City bay and the construction of a motorway connecting the Pacific to the Atlantic. One of the most visible signs of this economic boom has already marked Panama City, a Latin-American Hong-Kong where real-estate projects are growing. Five skyscrapers exceeding 300 meters in height, with hotels, shopping centres, offices, apartments and casino are in construction in the capital. One of them, financed by Donald Trump, illustrates well the new profile that the country intends to adopt. The American billionaire wants to build in Panama City one of his luxurious towers which made his success. With an estimated cost of 220 million dollars, Trump Ocean Club, whose silhouette will rise in the North-West of the bay, is right now the most expensive real-estate project of Latin America.

Article Source: http://www.articlerich.com

Marcus Laval is a senior analyst with an experience of more than 20 years, who has written more articles on development projects and published them at Press Centre

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Source: VIP Panama

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PANAMA CITY, Panama, September 11, 2006 – At a recent forum in Panama, sponsored by newspaper Capital Financiero, Fitch Ratings analyst Erick Campos said: “If handled appropriately, the Panama Canal expansion project should have a long-term, positive economic impact.” Fitch said that the money needed for the Canal expansion would not affect Panama’s risk rating as long as fiscal consolidation and strong economic growth continues. Moreover, Campos declared that if it were to assign the Panama Canal Authority (ACP) a credit rating, it could be higher than BB+, which is Panama’s present credit rating. At this juncture, the ACP is not obtaining a credit rating and has not hired a credit rating agency. Investment ratings provide investors with a financial picture of a company’s or a sovereign government’s financial health, taking into consideration its management, debt levels, finances, and other similar criteria. It is a metric that measures investment risk. The Panama Canal expansion proposal would build a new lane of traffic along the Panama Canal that would double capacity and allow more traffic. The project is estimated to cost $5.25 billion and would be paid entirely by users of the Canal through a graduated system of toll increases. According to the Panamanian Constitution (Title XVI, Article 320) and Law No. 28 (July 17, 2006) of the National Assembly, the Panamanian government will not guarantee the ACP’s debt for the Panama Canal expansion.

Editor’s Comment: I’ve already published this information once, and this is just and ACP news release. But, far be it from me to miss the chance to use the “thumbs up” graphic. I think I’m going to start the “Big Hooters for a “Si”” political party…

Fitch Ratings is a leading global rating agency dual-headquartered in New York and London committed to providing the world’s credit markets with independent, timely and prospective credit opinions. Fitch Ratings currently maintains coverage of 3,100 financial institutions, including 1,600 banks and 1,400 insurance companies.

About the Panama Canal Authority: The Panama Canal Authority (ACP) is the autonomous agency of the Government of Panama in charge of managing, operating and maintaining the Panama Canal. The operation of the Panama Canal Authority is based on its organic law and the regulations approved by its Board of Directors. For more information, please refer to the ACP’s Web site: www.pancanal.com.

The Authority’s responsibility to the Panamanian people is paramount. The Canal belongs to the people and benefits from the Canal should accrue to as many Panamanians as possible. The Authority will plan its future so that it will continually contribute to the economic development and welfare of the citizens of Panama.

SOURCE: Don Winner @ Panama-guide.com

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Source: VIP Panama

If you are interested in investing in Panama, gaining residency here, doing your offshore banking in Panama, starting a business, meeting the right people, or finding the ideal retirement location on the beach contact one of our Panama experts today.

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By Bill Faries Oct. 23 (Bloomberg) — The Panama Canal will double its capacity after voters yesterday approved a $5.3 billion expansion plan, making the 92-year-old waterway more competitive to lure the world’s largest tankers and container ships. The project, which the government says should be completed by 2014, will create a third set of locks and give freighters carrying up to 12,000 containers an alternative route for traveling between Asia and the eastern U.S. “This will have a big impact on container shipping, and less so on crude oil tankers,” said Morten Arntzen, chief executive officer of Overseas Shipholding Group Inc., in a phone interview after the vote. The New York-based company owns a fleet of 116 ships transporting oil and petroleum products around the world. The referendum passed 78 percent to 22 percent, the nation’s electoral tribunal said after counting 96 percent of ballots. Opponents argued the money would be better spent on schools and hospitals and that costs could exceed estimates, the British Broadcasting Corp. reported Oct. 20. Panama, which relies on the canal for about a fifth of its government budget, is becoming less competitive as larger ships classified as “post-Panamax” — too big for the canal — now account for 27 percent of the world’s container ship capacity. That proportion will grow to 37 percent with the addition of 250 post-Panamax ships to the global fleet by 2011, the authority said in a report.

`Important Decision’

“This could be the most important decision that this generation is called upon to make,” Panama’s President Martin Torrijos said after casting his vote, according to his Web site.

The Panama Canal Authority took control of the canal from the U.S. in 1999. The authority has financial independence from the Panamanian government; the president and congress appoint its management.

The authority expects to raise existing tolls and tap debt markets for most of the project’s financing, according to the authority’s Web site. Using those sources, the authority says the canal’s construction costs will be fully recovered within 11 years. The expanded canal could charge as much as $250,000 for a single crossing of a larger ship, the BBC said, citing the canal’s Francisco Miguez.

Rosetta Stone – Fastest way to learn a language.

Any bonds issued to finance the expansion won’t be sovereign Panamanian debt, said Diego Ferrer, a trade attache at the Panamanian Embassy in Washington.

`Better Financing Terms’

“The canal is so profitable, it will likely get better financing terms than the country could,” he said. Panama’s long- term foreign currency debt is rated BB by Standard & Poor’s, or two levels below investment grade.

Larger ships bound for the eastern U.S. from Asia currently have two options for delivering their goods: sail east through Egypt’s Suez Canal, which can handle the new generation of ships, or head for ports in the western U.S. where cargoes are unloaded onto railcars and trucks for distribution.

About 30 percent of the 2,583 vessels docking at the Port of Los Angeles over the past year are too large for the Panama Canal, Arley Baker, a spokesman for the port, said in a telephone interview. Baker said ship traffic is growing so quickly along the U.S. west coast that port officials won’t be concerned about an expanded Panama Canal.

“We see our cargo volume doubling between now and 2020, so we don’t view the expansion as a threat to our business,” Baker said. “The expansion will basically help keep Panama in the competitive picture.”

Short, Narrow Locks

The locks, which raise and lower ships for passage across the isthmus, are too short and narrow to accommodate today’s largest vessels. The canal authority says construction of the locks will take seven or eight years and may begin receiving ship traffic as early as 2014.

Expansion could add between 1 percent and 2 percent a year to Panama’s economy over the next two decades, according to the authority. Approximately 16 percent of U.S. trade is transported on the canal.

The Panama Canal first came into service in 1914 and interest in adding a third set of locks followed almost immediately.

The U.S. government began work on a new system of locks in the late 1930s. That work was abandoned with the outbreak of World War II, according to Robert McMillan, former chairman of the Panama Canal Commission and author of “Global Passage: Transformation of Panama and the Panama Canal.”

In the 1980s, representatives from the U.S., Japan, and Panama again agreed that expansion was necessary, but the proposal made no progress until July of this year, when the country’s national assembly voted unanimously to send it to the voters for final approval.

To contact the reporter on this story: Bill Faries in New York at wfar...@bloomberg.net .

SOURCE: Don Winner @ Panama-guide.com

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Source: VIP Panama

Forty domestic and international banks have offered to finance the expansion of the Panama Canal including the building of three new locks, an overall investment estimated in 5.2 billion US dollars reports this week the Panamanian press. Among the financial institutions figure HSBC, Citibank, JP Morgan, BNP Paribas, Scotiabank and Bank of Tokyo which are willing to come up with 2.3 billion US dollars for the “peak points” of the inter-oceanic channel expansion timetable. According to the press the institutions are not only looking at the business side of the investment but “to figure in the list of co-financers of the largest infrastructure capital expenditure in recent history” opening the canal for Panamax and Post Panamax vessels, thus helping to better conditions for world trade. Jose Barrios Financial Director of the Panama Canal Authority said that the financing plan is conditioned to the tolls policy which will be worked out and defined in the coming months, following the referendum approval last October 22 of the expansion project.

Barrios pointed out that if the Canal authorities decide to submit their finances to the scrutiny of risk assessment agencies, the Canal Authority will achieve a better qualification than that of the Republic of Panama’s sovereign debt currently “investment grade”.

However Ricaurte Vasquez president of the Panama Canal Board of Directors said last week that for the moment there’s no interest in an investment grading from international risk assessment agencies.

He pointed out that Panamanian experts are working out a new set of tolls on which much of the financing of the works will depend. Apparently the issue has been discussed with users of the Canal and maritime companies’ representatives.

Vasquez highlighted that in spite of the cost of the enlargement, the Canal could receive additional income to the tune of 300 million US dollars per year because a new waterway “reliable and clean” in line with the Kyoto Protocol, would significantly reduce pollution and crossing time for vessels.

World Bank analysts admit that the construction of the three new locks would reduce emissions of carbon dioxide by and estimated 30 million tons annually. In the international “green exchange market” a ton of carbon dioxide ranges between 10 and 12 US dollars per ton.

SOURCE: Don Winner @ Panama-guide.com

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Source: VIP Panama

If you are interested in investing in Panama, gaining residency here, doing your offshore banking in Panama, starting a business, meeting the right people, or finding the ideal retirement location on the beach contact one of our Panama experts today.

Email us at The Panama Club for discrete answers to any questions you may have about Panama.

+507-836-6542 / 43 (Panama) | 1-(305)-503-9957 (USA)

. . . . . . .

Source: VIP Panama

If you are interested in investing in Panama, gaining residency here, doing your offshore banking in Panama, starting a business, meeting the right people, or finding the ideal retirement location on the beach contact one of our Panama experts today.

Email us at The Panama Club for discrete answers to any questions you may have about Panama.

+507-836-6542 / 43 (Panama) | 1-(305)-503-9957 (USA)