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The Expansion of the Panama Canal will double capacity and the new set of locks will allow larger ships to pass from ocean to ocean. Bidding for the lock construction is expected to be completed before the end of 2008 with several international construction consortiums in the bidding. The Panama Canal Authority has just received promises of loans up to $2.3Billion USD and expects to make up the rest of the $5.2Billion USD construction cost with toll increases over the next years. The locks themselves will cost roughly $3.25 Billion USD to design and build.

The Panama Canal Locks

The Panama Canal was finished in 1914 and was considered one of the world’s engineering triumphs. Thus the Panama Canal locks have been in operation for 94 years as of this writing. The locks were designed to allow passage of the largest American warship of the time. The construction of super tankers and giant cargo container vessels to large to pass through the Panama Canal locks has put a limit on how much traffic the Panama Canal system can bear. The new set of Panama Canal locks will allow most of the world’s larger boats to pass and, with the current locks, will be capable of a doubling of Panama Canal Capacity. Roughly 5% of world sea trade passes through the Panama Canal at the current time. Depending upon economic and world trade volume the post Panama Canal expansion facility could carry up to 10% of world sea trade.

There are four consortiums bidding for the Panama Canal Expansion Locks contract. The leading companies in each group are ACS Servicios of Spain, Comunicaciones y Energia, S.L. of Spain, Bouygues Travaux Publics of France, the Spanish company Sacyr Vallehermoso S.A., and Bechtel of the United States.
Preliminary specifications for the current and new set of locks are listed below.

During the lock construction phase of the Panama Canal expansion from 2009 to 2011 the Panama Canal Authority expects to be paying out $500M USD a year. Panama Canal revenue is expected to increase significantly with a set of toll increases and an expected doubling of shipping volume by the end of construction in 2014. Current Panama Canal revenue is roughly $1B USD and year and is expected to increase to $6B USD a year after 2014.

According to Moody’s when they gave the Panama Canal Authority a favorable rating for its loans for the Panama Canal expansion 30% of budgeted expenditure is for possible cost overruns and inflation beyond current expectations.

Panama Investment and the Panama Canal Expansion

Panama is making a huge investment in its future with the Panama Canal expansion. Panama is also making investments in its future with continuing improvements of its roads, ports, airports, and infrastructure in general.

It is no fluke that Panama’s economy is expanding as Panama takes advantage of its unique position between oceans and at the heart of the Americas. Panama real estate investment as well as investment in business in Panama has done well for more than a decade.

The jobs created during construction for the Panama Canal expansion will help stimulate Panama’s economy. The investment in the enlarged canal’s supporting infrastructure will likely carry Panama’s economic boom well into the mid 21st century.

For those interested in Panama investment, business or real estate, contact us at ABPanama where we have over 23 year experience managing real estate portfolios.