EXPANSION OF THE PANAMA CANAL

The expansion of the Panama Canal, an infrastructure project of historic proportions, is quickly taking form. The pre-qualification of the bidders for the construction of the new locks is anticipated by the end of 2007, with the final selection by the Autoridad del Canal de Panamá (ACP, the Panama Canal Authority) expected by mid-2008.  Bidding on the most significant contracts associated with the Panama Canal expansion project is scheduled to occur over the next eight months.  These projects are of great interest to major U.S. construction and engineering firms, as well as exporters of a variety of goods and services. 

 

BACKGROUND: 

In April 2006, Panamanian President Torrijos unveiled plans for a $5.25 billion project to expand the Panama Canal by constructing much larger new locks parallel to the current locks, with the capacity to accommodate state of the art “Post-Panamax” freighters.  (A “Panamax” is the largest ship that currently fits through the Canal.) The proposal was overwhelmingly approved in an October 2006 referendum which was required to be held by the Constitution.  The ACP estimates that it will take eight years to complete, and will be funded mostly by toll increases, plus $2.3–2.5 billion in debt financing.

 

Four major Canal expansion service contracts have already been awarded to date, with U.S. firms winning three.  On February 7, 2007,  the  (ACP) selected Mizuho Corporate Bank (Japan) as its financial adviser for the expansion project. URS Holdings, Inc. (San Francisco, CA) won a contract to conduct the environmental impact study on February 16th, and the law firm Mayer, Brown, Rowe and Maw (Chicago/ London) won the contract for general legal advisory services for the project on February 28.  The ACP subsequently hired another U.S. law firm, Shearman & Sterling (New York), as an international legal advisor on financial matters related to the project.

 

The ACP has just released tender documents for the Project Manager contract.  The firm or consortium selected for this contract will provide professional services, including project delivery, procurement assistance, scheduling, and cost control.  The project manager will also be tasked with ensuring that the planning, design, and construction projects are carried out in conformity with panamanian standards.  It is contemplated that the Project Manager will also select the Risk Manager.  Selection as Project Manager will automatically disqualify a firm from the largest of the Canal expansion contracts—the design-build construction of the Pacific and Atlantic locks, estimated at about sixty percent of the total value of the canal expansion program ($3 billion.)

Additional forthcoming tenders include: the dredging of the sea entrance navigation channel on the Pacific side (tender expected Q2-07); dredging of the sea entrance navigation channel on the Atlantic side (expected in 2008), and five contracts for access channel excavation on the Pacific side. 

KEY CONTACTS:

Nicholas R. Kuchova, Senior Commercial Officer U.S. Embassy Panama(nicholas.kuchova@mail.doc.gov 507-207-7388)

Enrique Tellez, Commercial Specialist, U.S. Embassy Panama (enrique.tellez@N0SPAM.mail.doc.gov  

507-207-7392)

Jeane Zuniga, Commercial Specialist, U.S. Embassy Panama (jeane.zuniga@N0SPAM.mail.doc.gov

507-207-7080)