Relevantinformationon the third set of locks
project
Project Components
.
Third set of locl$ project objectives.The objectivesof the Canal
expansionare: (l) to rnake long term growing and sustainable
contributionsto the Panamanian
society,throughthe paymenlsthat th€
Canal nakes to the National Treasury; (2) to rnaintain Canal's
competitivenessas well as the valueofthe Pananamaritime route to
the national economy;(3) to increasethe Canal'scapacityin orderto
captue the gowing d€mandwrth the appropriatelevel of servicefor
eachmarkel segment;(4) to increaseCanal'sproductivity, safetyand
efliciency.
.
Cercrol descriptiotr.The third setoflocks proj€ctis an integralCanal
capacityexpansionprognm with three main components,as follows:
(1) theconstruction
oftwo lock facilitres onein theAtlanticsideand
one in the Pacificside eachwith waterreutilizationbasins;(2) the
consfuction of accesscharmelsfor the new locks, as well as the
wrdeningof exrstlngchannels;
and (3) the deeperung
of fte existing
navigation chann€lsand the elevation of Gatun Lake's maximum
operating
level.
.
Lock locatioD.Onenew lock facilitieswill be locatedon the Pacific
sid€,to theSouthwest
ofMirafloresLock. Theothernew lockfacility
will be
will be locatedto the Eastof Calun Lock. Both complexes
within the ACP patrimonlalareas.
.
Number of lock levels.Eachoneof the two new lock facilitieswill
have three levelsor chambers,
slmilar to the configurationof the
€xlstingGat Lnlock.
.
will be427m (1,400')long,by 55
Locksdimedsiors.Lockchambers
m (180')wrde,and18.3m (60')deep.
PanamaCanalAuthorily
Apdl24,2006
Page I of 8
Maximum vesseldimensioDs.The new lock will allow the tmnsit of
vesselswith a beamof up to 49 m (160'),an overalllengthof up to
366m(1,200')anda draftofup to 15m (50').
Number of wrter r€utilizstioo brsins, Each of the chambersof the
new locks will havethreewater reutilizationbasinsfor a total of nine
basinseachlock facility and a total of 18 waterreutilizationbasinsfor
lhe entireprojecl.
DimensioDs of the wster reutilizatioo bssins. Each water
reutilizationbasinwill be approximately
70 m wide,430m long and
5.50mdeep.
Dlmcdsionsofthe oewlocks'approachchrdnels.Two newchannels
will be built to connectthe new lock on the Pacific side with the
(1) thenorthchannel,
existingchannels:
whichwill comectthe lockto
the caillard Cut channel,circurnventing
MirafloresLake,will be 6.2
Km. long and (2) the southchannellhat will connectthe lock with the
existings€aentmnceon the PacificOcean,will be 1.8Km. long.The
new channelswill be 218 m (715') wide,both on the Atlantic and
vesselsto navigatethose
Pacilic sides,which will allow posFPanarnax
channelsin onesingledirectionat a time.
DiDensioDsof the widenitrgrnd deepeniogof Gatun Lake lnd
Gailhrd Cut chsDdels.CatunLake andGaillardCut channelswill be
deepened
by 1.20m (4'), ftom level 10.4m(34') PLD to level9.1 m
(30') PLD'. catun Lake channelswill be widenedto no lessthan 280
m (920') on the straightportionsandno lessthan366 m (1,200')on
the b€nds.
Dim€Dsioosof the wideoidg rdd deep€nitrgof se! entnnce
chrtrDels. The navrgatlonalchannelsat the sea entranceson the
Canal'sAtlantic and Pacificsideswill be widenedand ds€penedto no
lessthan225 m (740') wide and 15.5m (51') deep,with the lowest
uoe.
Elevationof Gatun Lske's msximumoperatinglevel.CatunLak€'s
0.45 m
maximumoperational
level wlll be raisedby approxrmately
(89')
(87.5')
(1.5'),fromtheactual26.7m
PLD levelto 27.1m
PLD.
Gate types.The new lock will userolling gatesinsteadof miter gates
two rollinggateswill
astheexistinglocks.For safetyard redundancy,
b€ installed at each €nd of each lock charnber. Rolling gates
maintenancewill b€ performedinside the slol that they r€tract into,
dry dock.
whlchalsoservesasa nrarnrenance
The thr€€ compolentsof th€ third set of locls project's wat€r
level,(2)
prograD. (l) Ralsng GatunLake'smaximumoperational
deepenmgGatun Lake's navigationalchamel, and (3) three waler
reutilizationbasinsD€reachlock chamber.
I PLDis th€abh6viation
l€v€lls€d al lhs Canal.
of PredseL€rclDrluD,ll is lh6g6od6screlerence
PanamaCanalAulhonly
Apn|24.2006
Page 2 of 8
Water reutilizstion basins' yi€ld, With the waterreutilizationbasins,
the lhird set of locks will reutilize 6070of water in eachtransit. Th€
third set of lock will use 7% lesswater p€r $al$it than eachof the
existinglock lanes.
yiold. Deepening
Gatun Lake's chadneldeepetriDg's
GatunLake's
and Gaillard Cut's navigatioml channelswill allow the useof greater
lake storagecapacity,which will increasethe yi€ld ofthe water supply
systemby 385 million gallons(1,457million litters)of additional
water per day. This will be enoughwater to perform approxihately
2,550additionallockagesper year,or about7 additionallockagesper
day.
Gstutr Lake's clevstioD wst€r yield. ElevatingGatun Lake's
maximum operating level will increasethe lake storage capacity,
which wrll increasethe yleld ofthe watersupplys)6temby 165million
gallons (625 million liters) of addilional water per day. This will be
enoughwater to perform an amual aveEge of approximately1,100
additionallockages,or about3 additionallockagesper day.
Combided wrter progrrd yield. The combination of the tbree
componentsof the water programwill allow the Canal'swatersystem
to provide2,670million gallonsof additionalwaterper day, an amount
of waterequivalentto approxirnately
48.5 daily lockagesor 17,700
tianslls per year.
Cost estimatefor the third set of locks project,
.
Cost estimatefor th€ third set of lock projecL Theprojectwill have
an approximateestinutedcost of $5,250million, which includ€s
provisions for contlngenciesand inflation during the cor$tiuction
period.This estirnareassumes
2oloaverag€affIual inflation.
Canal markel
Mri! Clnrl msrket segD€Dts.During FY 2005, the contarneNhips
wilh 98 nxlhon PCUMStonsr.a 15% of total
segmentrepresenled,
PCUMS tonnag€fansitmg lhe Canal and 40% of its revenues.That
a 55 million PCTMS tons
sameyear,the dry bulk segmentreprcsented
volume ard l9o%of revenues,while the vehrcle carriers segment
generated
35 millionPCUMStonsor I loloofrevenu€s.
Key Clnrl route. Within the contarnerizedcargo segment,tmde
betweenNortheastAsia and the U.S. East Coast has the highest
lh6 oxisling
Canalor
An 6quivalent
lockag€
€tors lo lhe wal€rrequf€dlo transia vosselfrcmon€oceanlo li6 otherthrc{jgh
pff lransl.
galloas
approximately
55million
lvleasur€m€nt
Canal-ljniversal
torPanama
n rcUMSlons,PCUMS
b€ingh€ adonym
votum€
fansiting
th6Canalismeaslr€d
Cargo
A rcUi4sionis
v€sssls
volumetric
caqocapacily.
lclls,andmoasures
Sysism.
A rcUMSlonis th6unilus6dby$e Canalto€sleblish
13PCUI{S
lorc'
is€quivalsnt
lo app.oximalely
ande2Llo€llo.lgconhiner
100cubictu6ol cargospac€,
€iuivalonl
toapproximately
PanamaCanalAulhoity
April24,2006
Page3 ot 8
potentialfor Canaltrafnc groMh. At present,this rcute representsover
50% of PCUMSvolumeofcontarnerizedcargotransitingthe Canal.
Prolected traflic growth for the expanded Caml. IJr the most
probable scenario,Canal faffic will increaseftom the 280 million
PCUMStonsthat transitedthroughthe CanalduringFY 2005to nearly
510 million PCTMS tonsin FY 2025,which representsan 8270gro*4h.
ln the highestgroMh scenario,traffic will reach585 million PCUMS
tonsin 2025,while in the lowestgrowthscenadodemandwill gow to
almost480 nullion PCUMStonsin FY 2025.This representsa gtowth
ofbetween 72% and I l0%, consideringthe lowestand highestgroMh
scenarios,resp€ctively.
Growth forecrst for conteinerizedcargo traosltitrg the Calal. Most
probably,containerizedcargotraflic will increaseat an averageannual
rate of approximately5.6%, from 98 million PCUMStons in 2005 to
closeto 296 million in 2025.Ii the optimisticscenano,
containership
demandwould grow to reach345 million PCUMStons in 2025and,in
thepessimrstic
case,to 279million.
The odvantrgesof post-patrsmax
coDtsitr€rships.
Theseshipsolfer
scaleeconomiesthat reduceshrpp€rs'operdtionalcostper TELr by 7%
and l7%. Transcontinentalrcutes where shipp€rs may use postPanamaxv€sselshold an adva[tageover routeswhereth€semay not
be used,suchasthe Canal.
Other CaDal s€gments'growth projectiotrs.IIl termsof PCTMS
volume, the vehicle carriersamdcruise ships segmentswill have an
averageannualgrowth of between2o/oal.d 3o/o.Tlrc dry bulk segment
will grow at an averagenlte of about 1% per year during the next
twenly yea$.
Csosl comp€titors, ln the containershipsrnarket segment Canal
competitorsbetweenNortheastAsia and the U.S. EastCoast,are: (1)
the tralspacific routecombm€dwith the U.S. Intermodalsyst€mofthe
United Statesand(2) the SuezCanalroute
routebetweenNortheastAsia and
Market share.In the containerships
the U.S. East Coast,the Canal holds a 38% rnarketshare,while the
transpacific/ Ifltermodalroute holds 6l% ard the SuezCanal route,
l%. Should the Canal be €xpandedwith a third sst of locks, the
Pananmroute will increaselts narket shareto about4970.Otherwise,
Panarnaroute's markersharewrll deoeaseto about23%; that of the
Intermodal
systemwill go up to 65%:aodSuez'sto l2%.
flcet. By 2011,th€ entirc posThe post-PanamrxcootsiDerships
will
670 vessels
Panamaxcontain€rships
fleet
consistof approxrrnately
with a total capacity of about 4.6 million TEUS,twice the curr€nt
capacityof the posFPanalrv|xcontainenhip fleet. Therefore,by that
fleetcapacitywill be in
sameyear,3770of the world'scontain€rships
vesselsthat cannot!-ansitthroughthe Canaldueto their size.
' 0n6TEU(il€rlyJoolsgurvr/ont
a 20'longmadlimo
conlain6r,
o. its€quival€nl.
untlislie l€nnu$d lo rd€ntfy
PanamaCanalAulhority
Api 24.m06
P a g e4 o t 8
.
F€w ves6elsrepresent daDy trrNits. For market segmentsthat
opemtein itinemries,one singlevesselrepeatsits route muhiple times
per year. In January2006,therew€re 36liner servicesoperatng with
291 PanamaxcontaineFhipsin the NortheastAsia ard the U.S. East
Coast route thrcugh the Panana Canal. These vesselsrepresented
2,119transits,morethan 85 million PCUMStons,and paid 8/.377
million in tolls, which reprcsents33.8% of Canal rev€nues.In
conclusion,a reducednumberof largevesselsoperatingon per'nvlnent
rotationsrepresenta major traflic andrevenuevolumefor the Canal.
Canal capacity
.
Malimum sustaiDrblecrp.city of th€ €xistiog CaDal.With the
completionof a few remarmngimprovements,the Canal will have a
maximum sustainablecapacity of between 330 alld 340 million
PCUMStonsper year,equivalentto approxrrnately13,800and 14,000
ocean going vessel fansits per year. This maximum capacity is
determinedby the capacity of the €xisting lock, and cannot be
increasedfunher without the constructionofthe third serof locks.
.
The date r{h€Dth€ Canal wlll reachlts modmud copaclty.The
presentCanalwill reachits rnaximumcapacitybetweenthe yeais2009
and2012.
.
PrcscDt CaDsl utilizstioD level. Currently the Canal handlesabout
280 million PCUMS tons. Consideringits maximumcapacityof 340
million tons,the Ca[al is currentlyoperatingnear85%ofits rnaximum
sustainablecapacity.
.
Booldng slots shortrge. Oler 75yo of Canal use6 request a
r€s€rvationslot to guamnteea particulartransitdate,andthe numberof
theserequestsis increasing.The Ca[al doesnot hav€enoughtooking
slots for all lhoserequestingthem.During the last two yea$, lhe Canal
could not providea reservationto approximately20oloofthe userswho
requestedth€m.
.
Csnal crpacity is exhsustcd,Closeto 5070of transitingvesselshave
the maximwn wlth that fits in the locks and over 10oZhave th€
maximumlength.Approxrmately80% ofthe PCUMStonnagethat the
Caml handlestransitsin vesselsoflhe maximumdim€nsionsthat fit in
the locks. Also, most Canal us€rsaLeady utilize th€ largestvessels
appropriatefor the rcutesthey serve.
r
Capscity of tbc Canal with the third set of locks' The Canal,
expandedwith the thrd sel of lock, will havea nutxlmumsustainable
capacityof approximately600 million rcUMS tonsper year.
.
Maximuio vesselsizesthot may be usethe Dewlocl6. The new lock
containershipswith a
charnberswill be able to transit post-Panamax
366 m (1,200')l€ngth,49m (160') width and a 15 m (50') draft in
fopical fresh water. This is equivalent to containershipswith a
nominal capacityofup to 12,000,20' long containers,andtanke$ and
PanamaCanalAulhonly
Aprl242006
P a g e5 o f 8
dry bulk vessels of Capesizeand Suezriax dimensions.Typical
Capesizeand Sueanaxsizedvesselsthat would usethe posFPanamax
loch havea 130,000to 170,000
tonsdeadweigh! andare270 to 280
m in lengthand40 to 45 m in width.
Proiectexecution
.
Commissioniug.The executionof the third set of locb project will
startin 2007ifit is approvedby referendumduling 2006.
.
Proj€ct DuratioD. The executionofthe projectwill take up to 8 years,
between2007and2014.The third setof lockswill beginoperationson
2015.
.
Job getrerotion during project executioD. Estimates are that
approxirnately35,000to 40,000addihonalJob positionswill be created
drrectly and Indlrecllydue to $e proJec6consuuclonaco!'rtres.
During thesework, the periodwhenemploymentwill be mostintense
will be between20109ard 201L Amongthejobs hat will be created
during this p€ak constructionperiod, about 6,000 to 7,000 include
consfiuctionworkers.
.
Betweenl0% and15%more
Job gererationlfter projectexecutioD.
jobs will be createdin the economyif the Canal is expanded.It is
estimatedthat, without the expansionofthe Canal,by 2025 ftere will
be 1.5million employedpeople.The numberof additionaljobs created
will b€ between150,000
altd250,000jobs
by the
dueto theexpansion
year2025.
r
Paymetrtsto the Nrtiodol Treosury during th€ conatructiotr.During
the constructionof the third set of lock, the Canal will continue
makingcontributionsto the NationalTreasuryin conceptof rights per
ton and op€rationalsuplus. Thesepaymentswill rcver b€ less than
thosemadeto the NationalTreasuryin 2005of thosethat will be made
in 2006. In cumulativeterms,the Canalwill contributeover 8/.6,000
million in conceptofnghts per ton and surplusduringthe construction
p€riod,between
2007and2014.
.
Costs recovery. Third set of lock project investrnentswill be
recovered through Canal toll charges. In accounting terrns, the
investnentwill berecoveredin ten yearsor less.
.
Fin.ncing.The financingofthe thirdsetof lock will bethe resultof
combininga reasonabletolls inqease,impl€mentedimmediatelyafter
the moment when the proposal is approved,with interim exl€mal
financing sourcesin order to meetthe requilementsduring the peak
constructionperiod. Therefore,the third set of locks project will be
financed through a rrux of ACP capital contibutions and €xternal
financlng.The amour to comefrom extemalfinancingwill dependon
(l) investmentanountsrequlredby the project;(2) the needto build as
viabl€;(3) Canalrevenues
fast as it rs technicallyand economlcally
PanamaCanalAuthonly
Aprll24,2006
Page6or 8
resultilg fiom Canaltrafric volumesandthe price policy implemented
by ACP.
Finsncing will be temporary add sbort-termcd, Financingfor the
third set of lock projectwill b€ temporaryto coverthe project'speak
constructionperiods,and it will be repaidshortlyalter cornrnissioning.
The sourcefor the repa),rnentof this interim fimncing will be the
Canaltolls
No deod for State €odorseD€ot or gusrs[t€€s, The extemal
fmancing corltractsmdersigned by ACP for the third set of locks
project will llot havethe endorsement
of the State,and will be solely
gua$nteedby the cashflows that the project will g€nerate.No State
guarantees
will be utilizedto backup the third setof locksproject.
Differ€Dt lhlncitrg sources wlll be used, ACP will use financial
markelsdifferent than thoseutilized by the Stateto financ€its capital
proSrams.
Operational aspects of the expanded canal
.
ExlstiDg locks will continue to operrt€. The eisting lock will
continu€to operateduing constructionand oncelhe lhird set of lock
begins op€rating.With proper rnaintenance,the present Iock will
continueto work indefinitely.Thethird setof locks,dueto the increase
in capacity,will allow adequatemaintenanceof the existing lock,
which will haveb€enopemtingfor 100yearsby lhat time.
.
PositioDidg vessebwith tugboats, ln the third set of locks, vessels
lockageprocesswill be assistedwith tugboatsinsteadof locomotives,
asthey it is donenow.
.
TheCanalwill continueto
Uninterrupt€dpres€DtCadrl operotions.
Mthout
traflic
interruptions
during the consfiuction
work as usualand
of the thrrd setof locks.
.
New lock will work witb water llowirg by gravity. The n€w locks
and their water reutilizationbasinswill work similar to erdstinglocks,
wherewaterflowsby gravlty.wrthno needfor pumps.
.
Tolls collection. Tolls wrll oot be dilferent regardlessofwhich lock is
us€d.
.
Operstiotrs \dlth ood without bssins.The third set of locks will be
able to operatewithout the wat€r reutilizalionbasinsand maintainits
emciency, as well as its transit capacity.The third set of locks will
continue working even when water reutilization basins are und€r
maint€nance,
Projectenvironmentalaspects
.
No r€servoirs wlll be buill The third set of lock project doesnot
requirethe constoction of reservoirs.The expandedcanal will be able
PanamaCanalauthonty
Apfi24.2006
Page7 or E
to operateat tull capacitywithout the needfor additionalwater other
than that producedby the westemareaof the watershedwith Gatun
and Alhajuela lakes. lt will not be necessaryto relocate any
communities.Th€ projecl's constructionsite is entirely locatedwithin
ACP operationalandadministrativearcas.
Culturrl and scietrtiflc resources.Atchaeologicalandpaleontological
prosp€ctinghas beeo performedat the site of the new lock and
channels,and it has been detemined that no major archaeological,
cultulal or scientific findings are likely to occurin theseareas.Dunng
the construction,pennanentsupervisionof all arcaswhich may contain
cultuml or scientificaesouceswill be conducted.in orderto detectand
rescuethoseof scientificinterest.
Water qurlity. Gatunand Alhajuela Iakeswill mainain thef quality
of topical fiesh water wlth stableecoslstems,altd their water will be
kept only to well within appropriatequality levelsand standardsto be
potabilizedandusedby lhe populalion.
The proiect's economic and social yield
.
Project rste of returo. Basedon th€ mostprobabledemandprojection,
investnentson the thrd set of locks will generatean intemal mte of
returnin the orderof 127o5.
.
Socirl profitrbility rate. Th€socialprofitability rateofthe third setof
Iocks project is betweenllo/o and l4%. wllen studing lhe effectsof
expandingthe Canal on Panama'spove,Tty,conclusionswhere that if
thc projectis executedlhe numberof poorpeoplewill decreaseby over
one hundredthousandp€oplein 2025,as oppos€dto the no-€xpansion
scenado.
to
Effect oD the GIP. The expansionofthe Canalwill allow Pana.rna
reacha grossmtemalproductof 8/.31,700million in 2025,which
representsalrnost2.5 timesthat of2005, and is equivalentto over 5olo
averageannualgrowth for th€ next 20 yeals.
.
J Thelhfd ssloflaaks
in2005
byinllalion,
cashllowsnotatl€al6d
ret6ofr6tuminhe od6rol 12%.consijsring
at inl€met
Fo,ectgatrsBlos
ot
roturn.
g6neralgs
rate
prognm
a
14%
inlemal
po€Eblo
innafun,
lh6
€rpansion
annual
Takjng
into
account
a
296
av€fags
dollaA.
PanamaCanalAulhonly
Apdl242006
PageI ol6