Panama unveiled an ambitious US$5.25 billion plan on Monday to expand its famous canal to handle a new generation of mammoth cargo ships and oil tankers.
Opened in 1914 at a cost of 25,000 lives, the Panama canal was considered a masterpiece of engineering. It makes a shortcut between the Pacific and Atlantic oceans, saving ships the long trip around South America and the treacherous Cape Horn.
While much of the canal is made up of roomy lakes, modern, large bulk ships are too wide and too long to fit in its narrow lock systems, meaning Panama needs to expand it or risk losing business.
President Martin Torrijos and Panama Canal Authority executives said the expansion centers on building a second lane and a new set of locks to double its capacity. Construction should be completed by 2014, exactly a century after the canal was opened.
"Without doubt, it is a formidable challenge and a gigantic project," Torrijos said as the plan was announced.
It calls for up to US$2.3 billion in loans or bond issues to be paid back with the revenues from higher tolls on the canal. There will be no increase in Panama's sovereign debt.
The expansion has been Torrijos' main goal since he took office in 2004, and he urged Congress and ordinary Panamanians to back it.
"If we do not confront the challenge of expanding the canal and improving its capacity to continue providing an efficient and competitive service, other routes will inevitably emerge to replace ours," Torrijos said.
About 38 to 40 ships pass through the 80km canal every day.
Without an expansion, experts say the waterway could hit saturation point in as little as three years, forcing shippers to use different routes.
Mexico and some Central American nations have suggested they might dig their own canals.
The planned expansion must be approved by Panama's Congress, where Torrijos' party has a majority. Torrijos said information on the project will be made available to the public to fuel debate before the referendum, expected later this year.
Recent polls indicate that a majority of Panamanians favor the expansion.
France's Ferdinand de Lesseps, builder of the Suez Canal, started the Panama Canal in 1880, but abandoned it nine years later amid bankruptcy and construction problems, as well as malaria and yellow fever, which claimed most of the lost lives.
The US government under President Theodore Roosevelt bought the canal in 1904 and 10 years later, after a Herculean effort by 75,000 workers from 50 countries, opened the inter-oceanic waterway dividing North and South America.
The US, which saw the canal as key to naval supremacy, then ran the canal for most of last century.
In treaties signed in 1977 by then US president Jimmy Carter and Panama's populist dictator General Omar Torrijos, father of the current elected president, the US agreed to hand the canal over to Panama in 1999.
Last year Panama earned US$1.2 billion in canal fees, maintenance and other related services levied on some 13,000 ship crossings.
Opponents, however, contend the project is unnecessary and risky.
Former canal administrator Fernando Manfredo, who opposes the project, contends that it depends on variables like the growth of maritime world trade, world economic fluctuations and even politics.
"Our most important natural resource is not the canal, but our geographic position," Manfredo said in an interview, pointing out that the Pacific is becoming the "ocean of commerce."
RSS