Panama Canal Says Credit Crisis Won't Disrupt Expansion Funding
(Bloomberg) -- The Panama Canal Authority is confident of winning loans to fund a $5.2 billion expansion to more than triple the waterway's cargo capacity, even as the global credit crisis cuts access to funds and threatens growth.
``We have a very successful financing package put in place even in this unstable financial market,'' Alberto Aleman, the canal's administrator, said in an interview in Tokyo yesterday.
Expanding the 94-year-old canal will ease congestion and let larger cargo vessels, bulk carriers and oil tankers pass through. About 27 percent of the world's container ships are too big for the 50-mile (80-kilometer) canal, a figure that will rise to 37 percent by 2011, the authority has said.
So-called panamax ships, designed specifically to fit the canal, can carry 4,000 twenty-foot containers. Expansion will let cape-size vessels with as many as 12,600 containers transit the waterway linking the Pacific and Atlantic oceans.
``Ships are getting bigger and one voyage is able to deliver a lot more materials,'' said Suguru Uchida, spokesman for Nippon Yusen K.K., Japan's largest shipping line by sales. ``Larger container vessels and tankers have already started to navigate the Asia-Europe route.''
The authority is seeking $2.3 billion in overseas loans to help fund the work, including $800 million from the Japan Bank for International Cooperation, $500 million from the European Investment Bank, $400 million from the Inter-American Development Bank and $300 million each from the International Finance Corp. and Corporacion Andina de Fomento, according to its Web site.
New Locks
The project, due to be completed by the end of 2014, entails the construction of two new sets of locks -- one on the Pacific side and the other on the Atlantic.
JBIC, as Japan's state-owned overseas lender is known, will provide $400 million as part of a loan syndication. Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. will provide an additional $400 million.
Japan will garner trade benefits as the canal's expansion helps increase imports of iron ore and agricultural produce from Brazil and exports of electronics to the Americas, JBIC spokesman Ryutaro Nishizaki said.
Traffic through the canal probably won't increase this year for the first time since 2002, Aleman said last month, as the slowing U.S. economy damps demand for imports.
``The financial crisis will obviously have an impact on world trade and the canal, but this isn't the first crisis,'' Aleman said. ``In 2001 there was one, and looking further back there's the oil-crisis in the 1970s and Asia's financial turmoil in the late 1990's. The canal has gone through all these cycles.''
