There’s a lot going on in Panama these days, and the canal is just part of it—though a very large part indeed.
With a GDP growth rate of 6.6% last year, Panama has been busy capitalizing on its expansion of the great canal. Not only has the project brought in plenty of foreign money to the country—it’s expected to cost $5.3 billion by the time it’s done next year—but the country is now contemplating a second expansion project that positively dwarfs the present canal enlargement.
While the modifications already underway will allow the canal to accommodate Post-Panamax ships—something it’s currently unable to do—the new project, a fourth set of locks that can handle even bigger ultra-large container vessels (ULCVs), such as the Maersk Triple E class, will run between $16 billion and $17 billion. It’s expected to take about 15 years, if the country decides to go ahead with it, and would make the Panama Canal more competitive with the Suez Canal—to which it has steadily been losing business.
While the current expansion project is headed by Spanish (Sacyr) and Italian (Salini Impreglio) companies, the potential new move would be spearheaded by (surprise, surprise) a Chinese company: China Harbour Engineering Company Ltd (CHEC), a subsidiary of China Communications Construction Co Ltd, which is owned by the Chinese government.
China has already expressed interest in the potential for a new canal to be built through Nicaragua, so it’s to be expected that the country would be considering involvement in what would be a rival project—especially since the proposed Nicaraguan canal, slated to cost around $50 billion, is far from a sure thing because of the cost, a number of serious environmental concerns and a lack of experience on the part of the proposed builder.
Not that the current project is running all that smoothly; an ongoing dispute between the construction consortium and the Panama Canal Authority has slowed and even briefly stopped work at one point.
The canal aside, Panama has other prospects, although the government reported that GDP growth dialed back in 2014 to 6.2%, down from 2013’s 8.4%. Infrastructure projects have slowed, while exports to Colombia and Venezuela were down, contributing to the slowdown. Still, the country is looking forward to better times, with its Copa Airlines placing a $6.6 billion order for 61 new 737 single-aisle jetliners from Boeing as it works on upgrading its fleet.