Panama Canal extends bid deadline for expansion project
The Panama Canal Authority said Thursday it has extended until March 3 the due date for bids to build the new set of locks for expansion of the Panama Canal.
The construction of a third set of locks, along with water-saving basins, is the most significant contract in the massive project to widen the heavily used passage between the Pacific and Atlantic oceans for super-size containerships and increase its overall capacity. The new locks are designed to handle 12,000 TEU vessels, more than double the size of vessels that can currently transit the 50-mile canal.
The Panama Canal Authority (PCA) said it agreed to extend the submission date after receiving requests from among the four global construction and engineering consortia competing for the massive infrastructure project.
'The additional time given to the consortia will result in more fully developed bids on both the technical and price proposals, ultimately benefiting the project,' the PCA said.
It is the second time this year the PCA has extended the bid submission date. Proposals originally were due in August, but the
PCA in July extended the deadline until Dec. 10.
The PCA's unrealistic expectations for a bid timeline are partly responsible for the delayed rollout, according to a source within one of the consortia who did not want to be seen speaking for the group. The original Request for Proposals has already been amended 18 times, he said.
The PCA statement said the expansion process continues to be on track for its projected 2014 completion date.
The turmoil in financial and commodity markets is forcing infrastructure developers to take more time to double-check their cost assumptions before moving ahead with projects.
The expansion project is likely to exceed the $5.25 billion cost estimated by the PCA, said Sean Strawbridge, who heads up business activities in Panama for terminal operator Ports America.
When Canal officials completed their budget more than three years ago, they were dealing with a different set of economic factors. Since then prices for steel, copper, cement and fuel have skyrocketed (although oil prices are now falling back to last year's levels), significantly raising construction risks, Strawbridge noted.
'When doing financial planning you're not anticipating 100 percent to 300 percent swings in commodity prices. Those are not challenges that anybody anticipated. And that makes execution that much harder,' he said.
The current credit crisis has also forced Ports America to put on hold its sole-source, direct negotiations with the government of Panama to build and operate a new port at Farfan, on the western side of the Panama Canal, Strawbridge said.
Canal officials recently announced their final financing structure for the canal project. Five major multilateral agencies from Europe, Asia and Latin America have offered $2.3 billion in financing to the PCA for the project. The remaining cost will be financed through canal-generated cash flow.
The agencies and the amount they have agreed to lend are:
* European Investment Bank, $500 million.
* Japan Bank for International Cooperation, $800 million.
* Inter-American Development Bank, $400 million.
* International Finance Corporation, $300 million.
* Corporaci'n Andina de Fomento, $300 million. ' Eric Kulisch