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Water will determine Panama Canal expansion

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  • Sun, 11/11/2018 - 20:25
Canal
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Luis Miguel Blanco

"If there is no water, let's forget the fourth set of locks" of the Panama Canal; the opening of the Darién Gap "makes sense"  and "there is still much to discuss" in the arbitrations for the third set of locks with Spanish Sacyr, said the administrator of the canal, Jorge Luis Quijano.

Thus, without hesitation, Quijano told Efe his outlook on crucial issues for the waterway, which in fiscal year 2018, ended on September 30, had an increase in "9.5 percent" tonnage, which means that of the 403.8 million tons moved in 2017 it rose to about 442 million tons.

The estimation was to move 423.4 million tons in 2018.

In revenue, there was an increase of "almost 5 percent", which would imply an expansion of 3,037.5 million budgeted for 2018 to 3,189.37 million dollars in real numbers.

"We still do not know how much will be the final contribution (to the State) but that is decided by the Board at the December meeting, but it will be more than last year, there will be something additional," he said.

In 2017, the contribution was 1,650 million (it was 1,593 million dollars as budgeted) and for the 2018 budget it was already estimated that it would rise to 1,659.2 million dollars.

Quijano attributed this success partly "thanks to the exercise of advanced sales to avoid falling tariffs" applied by the United States in its trade war with China.

By 2025 the construction of a fourth set of locks has been considered, even Quijano in September 2016 announced the constitution of a team to study the matter, which conditioned the "demand" of the market, but already in 2014 the company China Harbor Engineering Company (CHEC) had expressed interest in the work.

"The fourth set of locks will depend on a factor mainly, and it is water, if there is no water let's forget about the fourth set of locks, the demand will be there, but we must adjust to how this demand is occurring," he said.

He argued that "in the 90's the most important thing was the movement of grains, and  before they were tankers, today they are container ships, but tankers have taken second place when you add gas carriers to oil and gas products; all those add up more than the bulk carrier".

The third set of locks "reflects a ship size focused on the container carrier and coincidentally there are those of liquefied natural gas, that is, the ability to adapt to our infrastructure and the business models have given us the ability to move in a very rigid business".

"Our infrastructure is not something that is built from day to day; it took us 9 years to expand, it's not the same as every three, four months, you make a chi; building a new lock it's going to take another 8 years," he said.

As for the proposed opening of the Darién Gap, the only land section where the Pan American Highway is interrupted on its route from Alaska to Tierra del Fuego "makes sense", he said.

The gap, on the border with Colombia, "has served its purpose" against the spread of diseases, drug trafficking, irregular migration, so that "before" thinking about opening it "a plan is required" to prevent these anomalies and also take care of the environmental aspect.

"You communicate a great producer country (Colombia) that could use our canal as its export point more than its ports, so there is great potential there", but "there is a commercial barrier that we have to solve right now, it's useless to open the door to Colombia to use us and yet Colombia denies give us that opportunity," he added.

He said that, "seeing it from the strictly commercial point of view, it really makes sense".

On the arbitrations, according to Spanish Sacyr, who heads the consortium that built the third set of locks, for 5.673 million dollars, Quijano said that by the end of the year "I do not think there is any news".

"There is still a lot to discuss in these matters, as soon as we know something by the arbitrations we will say it, we still have arbitrations in January in Miami; we do not have exact dates yet, but the result will not be seen at least eight to ten months before the arbitrations’ decision on these issues, since these arbitrations are so complicated," he argued.

The administrator said "we are preparing very well for this; we hope to succeed".

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