IDB supports Panama Canal expansion
(sandandgravel.com) The Inter-American Development Bank has announced that it has day approved a loan of up to US$400 million for the Panama Canal expansion, the largest infrastructure project underway in Latin America.
“The IDB has been a steadfast partner for Panama for nearly 50 years,” said Bank President Luis Alberto Moreno. “We are proud to assist in this key investment in the future of Panama’s greatest national asset, especially when conditions in international financial markets are so uncertain.”
The loan approved by the IDB's Board of Executive Directors is for Autoridad del Canal de Panamá (ACP), the autonomous government-owned entity that manages and operates the 77km canal linking the Atlantic and the Pacific oceans.
ACP plans to raise about US$2.3 billion in loans to finance the expansion programme, which has an estimated cost of US$5.25 billion. The remainder will be covered with cash flow generated by the operation of the canal, through which about 5 per cent of the world’s seaborne freight passes annually.
The Panama Canal, which has been in operation since 1914, is approaching its maximum capacity. The expansion programme, scheduled to be completed by 2014, will ensure the long-term competitiveness of the canal, which plays a crucial role in global maritime transportation, serving trade among economies around the world.
The program underway has four main components:
• the construction of a third set of locks, including two lock complexes and water-saving basins at each end of the canal,
• the dredging of the canal entrances on the Atlantic and the Pacific,
• the deepening and widening of the existing navigation channels,
• the raising to the maximum operational level of the Gatun Lake, which provides fresh water for the waterway.
The Panama Canal’s current lock chambers are sized for container ships with a maximum capacity of 4,500 TEU (20ft equivalent units). The new lock chambers will fit 12,600 TEU container ships. These locks will also use less water, as large volumes will be recycled through the adjacent basins.
During the construction phase, which started in 2007, the expansion programme is expected to create up to 7,000 direct jobs and around 35,000 indirect jobs. Once the work is completed, the canal will generate higher revenues for Panama and continue to be a safe, efficient and reliable waterway for global trade.
The IDB has been an integral partner for Panama since before the country took over control of the canal in 1999. The Bank supported the Panamanian government in the evaluation of expansion alternatives and in the preparation of a sustainable development strategy for the canal watershed. It also helped finance studies to quantify the benefits of the expansion programme.
The IDB loan for ACP, which recently received a prospective A2 investment grade rating from Moody’s Investor Service for the expansion programme’s financing, will not be underwritten by the Republic of Panama.
The IDB provides non-sovereign guaranteed loans and partial credit guarantees to private sector corporations and state-owned entities.
