Panama Canal Expansion Marks Milestone, Keeps Eye on Nicaragua Rival

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Panama Canal Authority on Monday marked a milestone in its canal expansion project with the installation of the massive first gate for the new locks on the Pacific side. The new canal lane will double the canal's capacity by 2016. But the waterway may have a rival in a few years--a groundbreaking ceremony was held in December for the Nicaragua Interoceanic Grand Canal.

Industrial Info is tracking five Panama Canal Authority projects worth $2.83 billion.

The Panama Canal expansion is 85% complete, according to the canal authority. The expansion is designed to accommodate bigger cargo ships and liquefied natural gas (LNG) vessels, which are too large to go through the existing canal lanes. The existing locks on the 100-year-old waterway allow the passage of vessels with cargos of up to 5,000 twenty-foot-equivalent units (TEUs). The expansion will allow vessels with up to 13,000 TEUs to transit the canal.

Upon completion, the two new lock complexes will have a total of 16 gates, eight in the Pacific and eight in the Atlantic.

The project's price tag initially was set at $5.25 billion, but cost overruns could increase that amount by billions of dollars, according to several news media accounts.

With a total investment value of $1.1 billion, the Gatun Locks expansion is the largest of the projects being tracked by Industrial Info. The project includes construction of a third set of locks at Gatun Lake. The consortium Grupo Unidos por el Canal (GUPC) (Panama City) is performing the engineering, procurement and construction (EPC) work.

Meanwhile, groundbreaking was held in late December for the Nicaragua Interoceanic Grand Canal. Developers of the project say the 173-mile waterway will be operational by 2019. With its ambitious construction schedule and estimated price tag of $50 billion, the project has been met with skepticism by the news media.

During the ceremony, Wang Jing, chairman of the project's operator and general contractor, HKND (Hong Kong Nicaragua Canal Development) Group (Hong Kong), said the project has begun on schedule, "though in doubts from the world, [and it] will definitely change the pattern of global maritime trade."

Under its agreement with the Nicaragua government, HKND would have the right to operate and manage the canal for 50 years, with a renewal option for an additional 50 years. Calling the project the "Maritime Silk Road of the 21st Century," Wang Jing said the canal would contribute greatly to the Nicaragua economy, and "will also be a great contribution of Chinese and foreign enterprises ..."

Industrial Info is tracking four Nicaragua Interoceanic Grand Canal Projects worth $24.05 billion.

The waterway would have an annual capacity of 5,100 ships, each with a cargo capacity of as much as 25,000 TEUs, according to Industrial Info. It would run from the mouth of the Brito River on the Pacific coast in southeastern Nicaragua, to the mouth of the Punta Gorda River on the Caribbean side.

Perhaps as a sign that the Panama Canal Authority is keeping an eye on its potential rival, the authority earlier this month proposed a new toll structure for canal users that includes a customer-loyalty program for container customers. Cargo companies that frequent the canal would receive a premium.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.