Tests of the new locks on the Atlantic side of the canal in June 2015. Photo: ACP
By Michael McDonald
(Bloomberg) — The April opening of Panama’s $5.3 billion expanded canal, originally set for 2014, could be delayed further depending on repairs to leaks discovered in the new locks during testing as the waterway ends a year of record shipments, administrator Jorge Quijano said.
The contractor building the new locks is expected to file a report within the next three weeks on the repair time line and any delay in the opening “shouldn’t be much if there is one,” Quijano said in a phone interview on Thursday. Shipments through the canal could rise to 360 million tons in 2017, the first full year of the expanded canal’s operation, after reaching a record 340.8 million tons in the fiscal year ending Sept. 30, he said.
“Even though there is talk that China isn’t very strong, with 6 percent growth, it’s a large exporter and the United States continues to be a large importer,” Quijano said.
The expansion, which has spurred a series of port and infrastructure upgrades throughout the Caribbean and the U.S. eastern seaboard, will make room for vessels with the capacity to carry as many as 12,600 containers, almost three times what the existing locks permit. The expansion will also facilitate tankers carrying shipments of liquefied natural gas.
The canal project, approved by voters in a 2006 referendum, has helped Panama’s $46 billion economy achieve some of the highest growth rates in the world in recent years. Gross domestic product will expand 6 percent this year, compared to a contraction of 0.3 percent for Latin America and the Caribbean as a whole, according to the International Monetary Fund. Total transits through the canal fell 3.1 percent in September from a year earlier, the first year-on-year decline since January.
Nearly $3 billion in cost overruns claimed by contractors are likely to be reduced once the claims process is complete, Quijano said. The group building the expansion won a $234 million ruling last year after claiming $463 million last year after for delays in execution of the contract.
The Canal Authority sold $450 million in global bonds last month to fund a new bridge spanning the Atlantic Ocean side of the waterway, a project expected to be finished in mid-2017.
©2015 Bloomberg News
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