Tuesday, January 21, 2014

Panama Briefs – January 2014: Panama Canal Expansion Costs Dispute


As the Panama Canal Authority, or ACP is facing the prospect of a work stoppage it confirmed last Thursday that it has held talks with other potential contractors as it prepares for the possible suspension of work on an expansion project this week, although it said it still hopes to resolve a financial dispute with the consortium building a third set of locks for the new section of the Canal.

The expansion project, now 72 percent complete, would double the capacity of the 50-mile (80-kilometer) canal, which carries between 5 and 6 percent of world commerce.

Photo by Juliette Passer
A stop-and-restart of the canal expansion, one of the largest construction efforts in the world, could mean a delay of months or even years, setting back the arrival of bigger ships, and higher fees, to ports along the entire U.S. East Coast, some of which have been carrying out their own improvements. The ships known as post-Panamax have more than twice the carrying capacity of those able to pass through the canal today.

Canal administrator Jorge Quijano told reporters after a meeting with Panama’s APEDE - business executives’ association in Panama - that he would not reveal the names of the companies he had spoken with “until we’re ready to act.”

“We’re prepared for that eventuality, (but) we’re still holding out hope that the United Panama Canal Group consortium (GUPC) reconsiders,” Quijano said, referring to the consortium led by Spain’s Sacyr that was awarded the contract for the locks project in 2009.

Quijano met later Thursday with Sacyr Chairman Manuel Manrique and representatives of two of the other three members of the consortium: Belgium’s Jan de Nul and Panama’s CUSA.

An agreement was reached during the meeting to “keep communication channels open over the next several days” to resolve the dispute, according to an official statement.

The GUPC - also made up of Italy’s Impregilo, which like Sacyr has a 48 percent stake in the consortium - said earlier this month that it would suspend work on the locks project on Jan. 20 if the ACP did not agree to pay an extra $1.6 billion to cover cost overruns.

Quijano told reporters Thursday morning that the contractors had not yet presented a “positive” proposal for resolving the conflict, reiterating that the offer the canal authority presented on Jan. 7 to resolve the impasse still stood.

The ACP said then it would advance the GUPC $100 million and give the consortium a grace period of two months to repay a previous advance of $83 million, provided the contractors also put up $100 million and withdraw their threat to suspend work.

The proposal was presented after a meeting between the ACP and GUPC was held at the urging of Spanish Development Minister Ana Pastor, who traveled to Panama as part of Madrid’s efforts to mediate the dispute.

The GUPC countered by calling on the ACP to fork out an advance of between $400 million and $1 billion, a proposal Quijano rejected as outside the terms of the contract.

The contract for the locks, which is the centerpiece of a $5.25 billion canal expansion, calls for the ACP to pay the consortium a total of $3.12 billion.

So far, the ACP has paid GUPC $2.83 billion, including repayable advances, plus an additional $180 million for cost overruns.

The contract provides for independent arbitration of disputes that GUCP and the canal authority cannot resolve through negotiations.

The Panama Canal, which was designed in 1904 for ships with a 267-meter (875-foot) length and 28-meter (92-foot) beam, is too small to handle modern ships that are three times as big, making a third set of locks essential.

As of today, GUPC is keeping the works to enlarge the Panama Canal moving at a snail’s pace, despite today having been the deadline for a suspension. Works continue slowly, without a resolution in sight with 7,000 workers suspended from 9,000 employed.

The APC said that the workflow has decreased to 25 percent or less, and that the negotiation would be within the confines of the contract, already violated by the construction group.

Canal Administrator Jorge Quijano has planned a Tuesday meeting with the authority’s insurance company, Zurich America, to plan possible next steps if a deal fails to materialize. He said the canal authority is prepared to take over the job in February and spend as much as $1.5 billion more to complete the bigger canal.


Photo by Juliette Passer
“We want United for the Canal to finish the job,” Quijano said. “Our intention is to find a way to get that done. That’s what’s best for the contractor and for us, but we also have to be ready in case they give up.”

An economist from the Association of Entrepreneurs of Panama, Aristides Hernandez, said that the APC cannot depend on the threats of suspension and continue without a resolution, since this would greatly affect the national economy. It is calculated that after it is finished, the Panama Canal will bring in $100 million USD in the first year, $279 million in the second, and nearly a billion dollars in the third.

“If the canal authority has to take over the job and look for companies it will have to oversee until the work is done, obviously there will be delays that are inconvenient for Panama, the canal and the entire world, which already has post-Panamax ships getting ready to be delivered,” said Roberto Eisenmann, founder of the influential newspaper La Prensa and an expert on the canal expansion.

Tuesday, December 31, 2013

Happy New Year!


Greetings,

 

Happy New Year!   ¡Feliz Año Nuevo!  C Hoвым Годом!

 
 
See you in Panama soon!
 
Best wishes,
Juliette & the NY - Panama Team

Monday, November 25, 2013

REMARKS BY VICE PRESIDENT JOE BIDEN AT THE PANAMA CANAL


THE WHITE HOUSE 

Office of the Vice President

For Immediate Release

November 19, 2013

 
REMARKS BY VICE PRESIDENT JOE BIDEN

AT THE PANAMA CANAL  
                                   
 Panama Canal, Panama



photos by Juliette Passer 

4:15 P.M. EST

 

VICE PRESIDENT BIDEN:  Mr. President, distinguished guests, and to the 9,500 workers who are expanding this Canal, on behalf of the United States of America, thank you.  Thank you for what you're doing.

 
I've been traveling up and down the East Coast of the United States and into the heart of the Midwest of our country and down to the Gulf of Mexico, telling the American people that something big is happening here in Panama that will have a profound effect on the economy of the United States of America.  By the widening and deepening of the Panama Canal, you're making not only a major investment, Mr. President, in your company's future -- your country's future, but in my country's future.  You're providing a service not only to the Panamanian people but the United States, the hemisphere and the entire world. 

 

I came here today from the Port of Houston in the state of Texas.  In 1956, the world's first container ship, the Ideal X, sailed into the Port of Houston.  Instead of sacks and crates and boxes carried neatly in the hull of the ship, on top of that ship were stacked containers on its deck.  In an instant, the shipping costs for a ton of cargo were reduced by 97 percent.  It changed global commerce. 

 
What you're doing here today, and what my colleagues and I are witnessing, is going to change global commerce.  It's shifting once again.  A new generation of massive vessels, known as post-Panamax ships, are able to carry twice or even three times as many containers as what has come before.  These ships are wider, longer, and their drafts are deeper.

 
I just looked at "the old Canal."  It can accommodate a 106-foot-wide ship.  The Canal being built here will accommodate 160-foot-wide ships.  The arrival of these new ships presents an opportunity for countries to transport goods more cheaply than ever before.  But it's also a challenge for all of us in the rest of the world to modernize to accommodate the infrastructure that you're building here, Mr. President.

 
People use the phrase all the time, "it's a global economy."  I'm not sure they fully understand that exactly, it is a global economy.  Seventy-five percent of all the commerce in the world as I speak is floating somewhere in the ocean as I speak, containing 75 percent of the world's commerce.  And what you're doing here in Panama is a next level -- is taking commerce to a brand-new level. 

 
That’s exactly what Panama is doing right now.  The Canal has two lanes that cannot handle these post-Panamax ships -- but not for long.  By the end of 2015, these massive new locks will open and be able to accommodate ships with 50-foot drafts, not 39.5; 1,200-feet long, not 965-feet long; 160-feet wide, not 106-feet wide.  The Panama Canal Authority estimates that it will double the amount of cargo -- double the amount of cargo -- that passes through this Canal now by the year 2015. 


And I'm here with my colleagues -- the Mayor of Atlanta, the Mayor of Baltimore, the Mayor of Philadelphia, and, ladies and gentlemen, the Senator from the state of a little old port called Savannah in the state of Georgia, and the Mayor from that state, and our Secretary of Transportation -- because it affects -- it will affect drastically, what's happening here, their communities, their people.  And it's going to require us to invest in 21st infrastructure like you're doing.

 
And I'm here because I believe that the cutting-edge Panama Canal and the investments that it inspires and the trade that it will make possible can be part of the story of the economic continued revival of the United States of America and the hemisphere. 

 
It's no secret that in 2008, the United States and the world went through a heck of a difficult time -- the greatest recession in our history short of a depression.  But we fought our way back.  U.S. businesses have created 7.8 million new jobs in the last 44 months.  Manufacturing is coming back to the United States.  We've created 500,000 new manufacturing jobs.  Our auto manufacturers have created an additional 325,000 jobs.  We now produce more natural gas than any country on Earth.  And for the first time, we've imported less oil than we have consumed -- than we produce in the United States. 
 

The reason I bother to say this is that the next phase here, the next phase is to take advantage of what this new commerce will do.  We know in America these representatives, Democrat and Republican, know in my home state, my states, they understand that manufacturers locate where they can cheaply, efficiently and economically get their cargo to a worldwide market. 

 
We still have a way to go in the United States, but we've made significant progress.  Our companies are competing, exporting to every country, every corner of the world.  And we're once again an engine of economic growth with the potential to create a next generation of good-paying jobs, as the jobs you're providing here are, Mr. President.

 
You've weathered that worldwide recession in part because of this bold commitment you and your people have made.  And we're ready for the new Panama Canal to contribute to our economic renewal as well.  And your project is profoundly in the interest of my country.  Two-thirds of everything that passes through the Panama Canal is either coming from or going to the United States of America.  So when the Canal doubles its capacity, the United States has a potential to expand exports at a considerably lower cost and considerably higher volume. 

 
So if we make the right investments at home, we will allow the United States ports to handle larger ships coming through this modernized Canal.  When exports can carry two to three times more in each container ship, that saves business.  That saves money.  That saves shipping costs.  That saves fuel.  And it makes manufacturers and farmers in America more competitive. 

 
For example, one-third of the U.S. grain and soybean exports travel through your canal.  By one estimate, each bushel will be about 35 percent -- 35 cents cheaper because of this Canal, making American farmers even more competitive. 

 
Building up our ports to handle the increased cargo will also create jobs for longshoreman, construction workers, engineers and others, dredging ports, widening docks, building new storage, also having intermodal changes in our railroads, in our Interstate Highway System. 
 

So I'm here with a simple, Mr. President, but heartfelt message to the people of Panama:  Thank you.  Thank you for having the courage to embark on this significant adventure here.

 
After telling so many others about the new and improved Panama Canal that's emerging, I decided, and my colleagues, that we've got to come down and see it for ourselves.  Instead of preaching to the choir, we wanted to be with the choir.  We wanted to make sure we saw it.  And I brought with me our Secretary of Transportation, Anthony Foxx; Georgia Senator -- one of the leading members of the United States Senate -- Johnny Isakson, representing the Port of Savannah, which, I might add, is responsible for more than $67 billion in economic activity and supports 350,000 full-time and part-time jobs across the state of Georgia, including in the city of Atlanta, it's largest city. 

 
The Atlanta Mayor Kasim Reed is here with me today as well, because it affects the standard of living in his city.  Florida Congresswoman Debbie Wasserman-Schultz, she represents ports bringing more than 400,000 jobs to Floridians.  Baltimore Mayor Stephanie Rawlings-Blake, where her port sends $22 billion in U.S. goods around the world with the label "Made In America" on them.  And Mayor Michael Nutter of my adopted hometown -- more than 2 million tons a year of containerized cargo pass through the Port of Philadelphia.  All of that, all of them have the ability to profoundly expand employment and income for their states. 

 
So, Mr. President, you may be surprised to learn that you have fans far afield.  You found out today, in Baltimore, Maryland; and Atlanta, Georgia; and Philadelphia, Pennsylvania; in South Florida.  Today -- I hope I don’t get you in trouble, Mr. President, but today, as we left our bilateral meeting, we then had an expanded meeting with my colleagues.  And I turned around as we were leaving and I wondered where the President was -- the President was surrounded by each of my colleagues bidding for him -- please come to Philadelphia, please come to Baltimore, please come to Atlanta.  (Laughter.)  I’m serious.

 
     So I just want to say to the people of Panama, this is a very important thing for the United States.  This new and improved Canal will also benefit Panama, to state the obvious, bringing an economic windfall in the form of greater revenue.  It will help Panama remain an indispensable part of the global economy. 

 
And as the energy production throughout the Americas grows, Panama is going to play a critical role in bridging energy supplies in the Atlantic with a growing demand in the Pacific.  This is good business.  This is good for Panama.  And it’s clear that the world of opportunity is available to those willing to make the necessary investments to compete in the 21st century. 

 
Panama is making that investment, and the United States has to do the same now.  We’re ready.  When the United States passed what we call in the States the Recovery Act, it included $48 billion in new infrastructure -- the largest public works project in America since the construction of the Interstate Highway System.  Each port, though, has different needs.  There are different places.  Bridges need to be made higher.  Wharfs need to be made longer.  Berths need to be made wider.  Water needs to be dredged.  Communities across our country are working to address these problems, and through federal grants, we’re working to modernize state and public funding. 

 
     That $48 billion the federal government supplied generated well over $150 billion in private investment and state investment.  The $10 billion [sic] we invested in one of the ports generated in that port another $80 million. 
 

So, folks, look, this is about the totality of how our infrastructure connects.  As Secretary Foxx says, it’s about the first mile and the last mile of infrastructure that gets American exports from the factory floor to the decks of ships.  For example, it’s about how a rail line in Ohio connects shipping to the Port of Baltimore.  That’s why we put in $50 million in investment and it generated multifold in that in terms of being able to have access to the ports.

      In conclusion, Mr. President, let me say what I’ve said to you privately on other occasions and I say publicly:  We thank the people of Panama.  And I want you to know, speaking for President Obama and myself, the day is long passed when America looks out and saw a backyard.  This is no backyard.  This is the yard -- this is the front yard.  The hemisphere is growing. 
 

For the first time in history, you can picture from Canada to the tip of Argentina a hemisphere that is democratic, middle-class, secure, as the leading engine of economic growth in the world in the 21st century.  And Panama will play a critical part in that.


     So, Mr. President, it’s not what we can do for you -- what you’re doing for us and what we can do with you.  The historic expansion of the Canal that is underway shows how strong Panama is and the pure self-interest of the United States of America.  You’re a powerful symbol of Panama’s success, Mr. President, and it’s a reminder that our futures, the United States and Panama and this hemisphere, are inextricably linked. 

 
Your work on this Canal strengthens my country.  We owe you.  We thank you.  May God bless you all.  And may God protect our troops.  Thank you all very much.  (Applause.)

 

                        END           
4:35 P.M. EST

 


Monday, September 30, 2013

Panama Presidential Candidates 2014


Greetings from Panama,

As the primaries drew to a close in Panama, Panama Presidential Candidates 2014 are: 

Juan Carlos Varela,  (born December 12, 1963) of the Panameñista Party, the second-largest in Panama;

José Domingo Arias, (born on 26 October 1963) of the Cambio Democrático; and

Juan Carlos Navarro, (born October 19, 1961) of the Partido Revolucionario Democratico (PRD).

Wednesday, September 4, 2013

Pacific Alliance (Alianza del Pacífico) is second largest user of the Panama Canal


Pacific Alliance, composed of Mexico, Peru, Chile and Colombia, is currently ranked as the second largest user of the Panama Canal.


"Separately, Chile is the third, followed by  Colombia as sixth, Peru is eighth and Mexico is ninth, but collectively they  are the seconds largest  user," said Mr. Arosemena in a forum on the prospects of joining  that group, organized by the Inter-American Development Bank (Banco Interamericano de Desarrollo).

       Photo by Juliette Passer, 2013

Recent figures from the Panama Canal Authority indicted that the main user of the Canal is the United States with 143.5 million tons and the second busiest is China with 52 million annually, but according to Mr. Arosemena, the Pacific Alliance, collectively, exceeds China.

"The Pacific Alliance is all about regional integration that is booming not only in Latin America but worldwide," said Arosemena.

The group emerged in April of 2011 in order to achieve trade integration agreements based on free exchange of goods between its members.

Currently, Costa Rica and Panama are observers and candidates to join after completing several processes, including trade pacts with each other.

Arosemena said that Costa Rica has already completed trade negotiations, while Panama has yet to sign with Colombia and just last week held the first round of negotiations with Mexico.


The Panamanian official indicated that for Panama it is important to join to provide an important platform for managing logistics for trade; besides the canal, citing the existence of a trans-isthmus railway communicating with dynamic ports on both coasts.

 

 

Tuesday, July 23, 2013

According to the latest AmericasBarometer survey, the Panama Canal Authority is considered one of the most trusted institutions in Panama.


According to the latest AmericasBarometer survey, the Panama Canal Authority is considered one of the most trusted institutions in Panama.

The survey is coordinated by Vanderbilt University in Nashville, Tennessee with the support of the United States Agency for International Development (USAID).

The Panama Canal has a 69.8% trust index, right below the Catholic and Evangelist Church.

“We feel proud that Panamanians trust in the Panama Canal Authority’s workforce. They make this accomplishment possible,” Panama Canal Administrator Jorge L. Quijano said. “Our commitment is to continue improving the Panama Canal’s service to the maritime industry, which will benefit our country.”

For more interesting data, visit:  http://www.vanderbilt.edu/lapop/insights2013.php

Wednesday, June 26, 2013

Panama Canal Additions to the Tug Fleet for Expansion in 2015

The Panama Canal has increased its tugboat fleet with the arrival of the first two of 14 tugboats that will improve the waterway’s resources to offer a safer and more efficient service to the global shipping industry. These tugboats will strengthen the Canal’s capacity for the operation of the Third Set of Locks.

photo by Juliette Passer


These new tugboats will allow the Panama Canal to continue offering a world-class service,” Panama Canal Administrator Jorge L. Quiijano said. “They will help us prepare to face the challenge of operating the new set of locks with the same efficiency.”

Quijano explained that the update to the Panama Canal tugboat fleet began in 2001, when the waterway had 20 tugs. Currently, the Panama Canal has 39 and by the end of next year and after retiring those tugs reaching the end of their lifespan, the Panama Canal will have a fleet of 44 tugboats to face the operational demands of the current and expanded Canal.

The additional capacity will allow assisting Post-Panamax vessels that will be transiting the expanded Canal, which will not require the use of locomotives used in the existing locks.