Panama Canal revenues down $2.4b than expected

By Finance

The Government of Panama expects $2.4 billion less in revenue from the canal in the next 5 years compared to the past, according to the finance minister, taking in consideration the cargo trends. Economic situation shows less dynamic trade that will harm also the revenue of the country from the Panama Canal.

The delay of the planned expansion of the waterway this year also plays its role in the decline of the country's revenues. There was also a slowdown of the working process earlier this year caused by a dispute between Panama authorities and the companies working on the expansion over cost overruns. A national strike also has impacted badly the Panama expansion project. All of these factors will result in decline of revenues from the world famous canal.

The Panamanian isthmus is important not only for the local people, but also for the whole world. It represents a short cut for military vessels and over time has become important for the world trade. The waterway has to be wider in order to allow the ships (growing over time, bigger and bigger ships are built) to pass through it. 

The Panama Canal expansion project had to be started at all costs. Since the ships are growing bigger and bigger, the canal over time will become useless. The Panama Canal needs a new set of larger locks and dredging.

After the construction work is done, the canal will be capable to handle almost every ship, except some of the world's container vessels along with supersize tankers and bulk carriers of ores and grains. Which companies participate in the expansion of the canal?

The contract for the project has been won by an international consortium led by Spain's Sacyr Vallehermoso with its innovative technology of rolling lock gates which slide into a side chamber, allowing easier maintenance on the most delicate part of the locks.

The idea of the expansion project emerged in 2001 and some of the people of Panama feared that the multi-billion investment will harm the economy by raising the public debt to 71% of GDP.