Panama Canal chief confident about expansion

Panama Canal chief confident about expansion Panama Canal Authority's Alberto Aleman Zubieta is expressing confidence that his agency will be able to complete on time and within budget a massive project to allow more and larger ships to use the waterway.
   “We can finish and open no later than the year 2014. I believe this is a very important infrastructure program for the maritime world. It will change some of the parameters in how trade moves on east-west routes,” said Aleman, ACP's chief executive officer, during a press conference today. “And I’m pretty sure Panama will become, as is already happening, the most important transportation and logistic hubs of the Americas.”
   While the cost of building materials such as steel and concrete are rising, Aleman noted that the authority built generous cushions to cover inflation and unexpected contingencies when it developed the $5.25 billion budget for the expansion project. The budget includes close to $1.5 billion for contingencies and a provision for 2 percent annual inflation over the life of the project.
   “Our first project that we bid out was under our estimated cost, so hopefully we are being conservative in our approach,” he said.
   The cost of the project will be paid for with revenue from the canal, though the agency will go to market to cover costs during the peak years of construction.
   “We expect to raise about $2 billion from the capital markets for this project and it will be paid for out of the income that the canal produces,” he explained.
   “We have been engaging the financial sectors and I was in New York a few weeks back. There is a lot of interest by the financial sector in providing financing to this project,” Aleman said. “We feel confident that we have one of the best projects today in the market.”
   ACP plans to let eight major contracts as part of the expansion, which will build a third lane with larger locks that will allow much larger ships to use the canal, he said.
   The first of several excavation projects has already been awarded and construction began on Monday during a ceremony in which Panama President Martin Torrijos, former U.S. President Jimmy Carter, and heads of state from several Latin American countries including Columbia, Honduras, El Salvador and Nicaragua participated. Torrijos’ father, Omar, signed the 1977 treaty with Carter that led to the canal being turned over from the United States to Panama at the end of 1999.
   The authority has also begun to process of prequalifying bidders for design and construction of the locks that will raise and lower ships as they pass over the isthmus. It expects to pick the four finalists to bid on that project by the end of the year.
   Aleman expressed confidence that the new locks — which will increase the size of the largest containerships transiting the canal from about 4,500 TEUs to 12,000 TEUs — were the correct size even though one shipping company, Maersk, has already begun building some containerships that would be too large to transit the new canal. Maersk's largest ships are used on an Asia/Europe route.
   “Most of the ships that are being built will fit ' and there is a design that is being posted for 12,600 TEUs that is limited to the size of the new locks of the Panama Canal,” he said. “The workhouse of the industry is going to be a ship that will be around 9,000 TEUs. When you look at what is being built, the main numbers of vessels are in that area.
   “Panama is fast becoming the most transportation hub and logistics hub in the Americas,” a port with “terminals in two oceans” connected by a railroad and a new highway that is slated for completion in 2009, he said.
   Development of terminals near both entrances to the canal allows ships plying east/west routes to interchange cargo with ships moving cargo to the Pacific and Atlantic ports of Latin America, he added.
   Aleman said the bigger canal will benefit distribution activity at the free trade zone in Colon and distribution facilities being developed at a former U.S. Army base near the Pacific entrance to the canal.
   Other sectors of the economy that will benefit from the expanded canal include banking, insurance, legal, call centers and businesses servicing the maritime sector. For example, workers for tugboats or terminal cranes are being trained today in Panama, and he said graduates of the country’s new maritime university are finding strong demand for their skills.