Panama Canal Referendum in Three Weeks

PANAMA will hold a referendum in three weeks to decide whether the Panama Canal will be expanded.

However, Enrique Sanchez, manager of the Contracting Division of the Panama Canal Authority said yesterday that polls conducted across the Central American country, have shown overwhelming support for its expansion.

If the project gets the green-light, it will be self financed at an estimated cost of US$5.25 billion.

Gross revenue generated by the Canal for fiscal 2005/6 (fiscal year ends September 30, 2006), reached US$1.4 billion, with the Panamanian Government netting approximately US$600 million of that figure.

"The Panama Canal has turned out to be a very good business for the Panamanian people...it may not be as much as oil business, but it is very good business," he chuckled.

"The plan is to raise tolls on the Canal between three and four per cent over the next 20 years gradually...in other words the customer pays for the expansion.

"And then a small part of the expansion, will require borrowing about US$2 billion, from international financial institutions, to be repaid also by the tolls," Sanchez said.

Expansion is carded to commence in 2007 and end in 2014, with an expected 40,000 direct and indirect jobs generated, most of which will be filled by Panamanians.

The canal expansion is something that should have been done long ago, but I'm glad it wasn't, as we would have had to foot the bill (before our most beloved (gag) president gave it away...)

Having seen entertainment presentations about the proposed plan, I'd say that the estimated 5.5 billion will be the tip of the iceberg and likely the end cost will top 10 billion. It's a pretty bold plan.

But I have to wonder if the Panamanian government made a mistake in not considering other options. Two massive deep water ports, with a connecting high speed rail line, might have been a far better choice for the future.

ACP brought it following consultants to help with their cost estimates:

Parson Brinkerhoff International
Montgomery Watson Harza
Clair Murdock Consultants

and further reviewed by a special technical committee which included experts from Arizona State University, the University of California and the University of Colorado.

The risk analysis model was developed by the consulting firm Aon Risk Services with help from the ACP.

ACP considered the rail plan. It simply is not financially feasible and it was outlined in their plan. Page 23 to be exact:

"...right now moving a container from the vessel to the yard costs an average of between $80.00 and $200.00 and moving a container via railroad from one port to another costs approximately $175.00. In contrast, transiting that same container through the Canal now costs $49.00.

Furthermore, a train designed to transport containers has an average capacity of between 200 and 300 TEUs. Consequently, transporting the cargo equivalent to a 4,000-TEU Panamax vessel would require up to 20 train trips and moving containers from an 8,000-TEU post-Panamax vessel would require up to 40 train trips."

Yes, as long as they don't cut all the trees down. They have been doing a good job at policing that. The environmental people are being given more support by the government and the ACP is actually very involved with this aspect of the land they control.

The new locks are supposed to use 7 percent less water per lockage than the old locks.

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