Panamanian president Martin Torrijos will unveil a multi-billion dollar plan to widen the Panama Canal this week, sources in Panama have told Emerging Markets.
The expansion is necessary to accommodate the growing size and volume of shipments from Asia to the United States.
Torrijos had promised to release the long-awaited blueprint, together with Alberto Aleman Zubieta, CEO of the Panama Canal Authority, by March 31st.
Now sources in Panama have told Emerging Markets that the plan to build a new lane and a wider set of locks could be made public this week.
The expansion is slated to cost between $5 billion and $8 billion, and Aleman Zubieta has repeatedly said several times that most of this will be covered by tolls on shippers
The two existing lanes of the Panama Canal can handle most of the world’s shipping vessels. However at 100 feet wide and 85 feet deep they are too narrow and shallow for the post-Panamax (Panama Canal Maximum) ships, which carry more than 9,000 containers and are increasingly used on shipping routes between China, North Asia and the east coast of the United States.
In recent years, traffic passing through the Canal has increased to the point that it operates at 93% of capacity, handling over 13,000 transits per year. A third set of locks will allow wide container ships through, and also expand capacity and reduce the waiting period for the smaller vessels that pass through the existing Canal.
The expansion plan must first be approved by the board of directors of the Panama Canal Authority, and then by the majority of Panamanians in a public referendum that Torrijos has promised for this year. The political challenge will be to justify the expansion of the canal to citizens, and to prevent them from using the referendum to cast a negative vote on the government’s recent fiscal and social security reforms.
The design for the proposed locks includes measures to reduce the amount of water used to fill the locks, and to raise ships to the level of the waterways that connect the Pacific and Atlantic oceans. Water-saving basins next to the locks will recycle up to 70 percent of the water used.