From: Eloy O. Aguilar, Associated Press
Published April 24, 2006 12:00 AM

Panama President to Unveil Plan for Panama Canal Expansion

PANAMA CITY, Panama — Panama's president is asking his citizens to approve a multibillion-dollar gamble on the future of the Panama Canal: a plan to refit the waterway to accommodate huge modern cargo ships that would entail the greatest modifications since the canal opened in 1914.

President Martin Torrijos was scheduled on Monday to outline a plan to expand the canal for the large cargo ships that cannot fit through its 33-meter-wide (108-feet-wide) locks, designed by U.S. engineers about a century ago. He will need to get the plan approved in a national referendum later this year.

The project, backed by the Panama Canal Authority, would be a mammoth investment for a country whose annual budget is US$6.5 billion (euro5.3 billion).

The government's determination to go ahead with the project is fueled by fears that the new cargo ships -- which can carry twice as many containers as those that fit through the canal -- will seek other routes, reducing the importance of the Panama Canal and its income-generating capacity.

In 2005, 13,000 ship crossings left US$1.2 billion (euro1 billion) in Panamanian coffers for canal fees, maintenance and other related services.

The canal, 32 meters (105 feet) above sea level, uses a series of parallel locks or water chambers to lift ships to Lake Gatun for the 80-kilometer (50-mile) cruise from one ocean to the other. A third set of wider locks would allow the larger ships to get through.

The additional locks would require a system that would save part of the water that is now dumped into the oceans as the ships are lowered or lifted. It would also require widening the canal basin fed by the Chagres River.

The government has not said how much will be spent on the expansion, although independent analysts estimate it will cost between US$5 billion (euro4 billion) and US$8 billion (euro6.5 billion).

If approved, the project is expected to take at least six years.

Panama took over administration of the waterway on Dec. 31, 1999, a day after the last U.S. flag was lowered in what used to be the Canal Zone, signifying the end of U.S. military presence here.

Opponents of the expansion, among them former canal administrator Fernando Manfredo, argue that it is unnecessary and risky because it depends on variables like the growth of maritime world trade, world economic fluctuations and even political factors.

"Our most important natural resource is not the canal, but our geographic position," Manfredo told The Associated Press, adding the Pacific is becoming the "ocean of commerce."

Manfredo is the leader of a group that believes an estimated US$600 million (euro488 million) megaport at the Pacific end of the canal would be a better idea. It would be a cargo center where the large ships would transfer their loads to smaller ships that would carry them to the Atlantic.

The group says there are only about 300 ships too large for the canal and their trade routes are basically in the Pacific, where the six largest megaports are located.

"The canal will remain the best alternative regardless of the size of the ships," Manfredo said.

The United States, which built it, remains the number No. 1 user of the canal, followed by the South American countries as a bloc and China. About 14,000 ships representing 5 percent of the world's trade pass through the canal each year.

Roberto Eisenmann, a banker and political analyst, said that the canal's capacity is reaching its limit and the expansion would also help ease the strain.

He added that private banks have shown their willingness to finance the project.

Recent polls indicate that 56 percent of Panamanians favor the expansion, 19 percent oppose it and the rest are undecided.

Source: Associated Press

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