Panama has unveiled plans to increase tolls on the Panama Canal to help pay for an ambitious US$5.25 billion expansion of the world famous waterway, a senior government official said.
The Panamanian Congress has formally approved the ambitious plan to widen the Panama Canal, its biggest expansion since it opened in 1914, in order to accommodate modern ships which have now become too wide to go through the canal. And even those ships that can pass have to queue for hours.
“It’s a lot of money, it’s about a third of the economy,” said Ricaurte Vasquez, Panama’s minister for canal affairs, referring to the cost of the project.
Panamanians overwhelmingly approved the plan in a referendum on October 22 and the overhaul will allow their inter-oceanic canal to handle mammoth modern cargo ships.
Panama has already put canal customers on notice that it would like to double canal tolls over the next 20 years to finance the expansion.
US vessels remain the biggest users of the canal, followed by Chinese and Japanese ships, and also Chile, according to the Panama Canal Authority.
Vasquez said Panama’s possible need for external financing to overhaul the canal would depend on its toll revenues. “The financial needs will be increased or reduced accordingly.” he said.
The 80-kilometer Panama Canal, which was controlled by the United States until 1999, handles nearly 5% of global trade. At present, it can only handle ships carrying up to 4,000 containers, known as Panamax vessels. But with wider locks and deeper and wider access canals, it could take ships carrying up to 10,000 containers. The current locks are 33 meters wide, but the new locks would be 50 meters. A third lane of traffic would be able to handle the wider loads.
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