LatinFinance - March/April 2013 - 60

Panama infrastructure

Vessels moved 5.6 million TEUs through the canal in 2010
construction, the ministry says.
and the forecast for 2015-2016, the first full year the new
The boom can be seen in a dizzying array of public works
locks will operate, is 8.6 million TEUs. The canal handles
projects and private investment across the country. And
approximately 5% of world trade.
while the highest profile projects – such as the Panama
The expansion is being financed with loans from
Canal expansion or the Panama City subway system – are
international agencies. The Andean Corporation for
nearing completion, more possibilities are materializing. The
Development has lent $300 million, the European Investment
government is looking to turn Panama into a Latin American
Bank, $500 million, the Japan Bank for International
logistics hub, while at the same time hyping potential in the
Cooperation, $800 million, the Inter-American Development
mining and energy fields.
Bank, $400 million, and the International Finance Corporation,
“Large-scale infrastructure projects are the driver at the
$300 million. The remaining $2.9 billion will come from tolls on
moment,” says Michael Henderson, an emerging markets
ships using the canal.
analyst at London’s Capital Economics. “It is the thrust of the
Those levies are tricky, however. The country plans a dual
growth story, but they are trying to broaden this and develop a
rate system for ships using the new locks and smaller vessels
Singapore-like model to become a hub for logistics.”
going through the existing infrastructure. The final prices are
Christopher Ecclestone, at the New York-based research
still being worked out, but
shop Hallgarten & Company,
under current rates, which were
agrees that Panama is grooming
Expansion ahead
revised in 2011, the toll per
itself as a logistics hub. This will
Number of transits through Panama’s canal
TEU is $74. This would mean
also allow it to tap into natural
that a large vessel carrying the
resources, primarily mining, that
14,800
new maximum load would pay
are only now attracting attention,
14,600
$932,400 to use the new locks.
he says. The country’s geology
14,400
The state received just over
has been largely unexplored and
$1 billion in revenue from the
projects underway will likely
14,200
canal in 2012, a slight decrease
bring in big-name players, he
14,000
from the previous year. The
says.
13,800
amounts are forecast to rise
“The place not only has the
sharply once the project is
geology, but there is a port only
13,600
completed. Revenue paid to
a stone’s throw away no matter
13,400
the treasury between 2000 and
where you are and empty ships
13,200
2012 was $7.6 billion, while the
going in one direction or another,
ACP forecasts that the state will
making it easy to get product
13,000
receive $30.7 billion between
from a mine to a port and to a
2007 2008 2009 2010 2011 2012
2015 and 2025.
final market destination,” he
Source: Panama Canal Authority
“The deepening of the canal
says. “If managed correctly,
will undoubtedly increase traffic,
mining could provide a new,
and this is going to be a major source of revenue. It is going to
steady source of revenue for the state.”
provide a huge boost to the economy,” says Heather Berkman,
Public spending
Latin America analyst for the Eurasia Group in New York.
It is impossible to talk about investment in the country, or
The canal’s importance cannot be underestimated, says
Panama in general, without looking at the impact of the canal
Ecclestone. “It is what put Panama on the map and the
inaugurated 99 years ago this August. The waterway has
deepening of the waterway has helped Panama grow faster than
dominated the country’s economy and politics and a $5.25
any other country.”
billion expansion project started in 2007 has been at the heart of
The other major project underway is the subway system in
the economic boom.
the capital, which will be completed next year. It has cost close
The expansion of the 80-kilometer transit passage was
to $2 billion.
slated for conclusion in 2014, the centennial of the original
President Martinelli, in an address to Congress in late
construction, but was delayed until mid-2015.
January, said public investment “has generated and will generate
The main component of the expansion are new locks 427
great changes in Panama for all sectors”. In addition to the canal
meters long by 55 meters wide. The extra size – the existing
and subway, he highlighted new water works and major outlays
locks are 305 by 34 meters – will sharply increase the cargo
for building hospitals, schools and other social infrastructure.
ships can carry through the canal. Today, loads are limited to
Public investment in infrastructure, including the canal, is
4,400 twenty-foot equivalent units (TEU), the standard unit of
equivalent to one-fifth of the country’s GDP, estimated at $35
measurement for cargo containers. That will increase to 12,600
billion for 2012.
TEUs once the expansion is completed, according to the Panama
Berkman says another major area to watch, which will
Canal Authority (ACP).
continue pumping up the construction sector, is tourism.

60 LatinFinance

March/April 2013
LatinFinance - March/April 2013

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