- CK Hutchison runs existing ports outside the canal jurisdiction.
- $8.5 billion capital plan includes ports, pipelines, and reservoirs.
- Modern cranes to boost efficiency, compete with the Port of Cartagena.
The Panama Canal is gearing up to dive into the ports sector with plans for a tender involving two terminals, all while the backdrop of rising US-China tensions over the waterway looms large, reports Business Standard.
Tender Plans for Atlantic and Pacific Terminals
The Panama Canal Authority is set to kick off a tender to manage one port on the Atlantic side and another on the Pacific, both of which will be connected to a liquefied petroleum gas (LPG) pipeline. While the canal will own these terminals, they will likely be run by a third party, as Ricaurte Vasquez, the head of the authority, shared in a recent interview in New York. “We are coming into the game of port terminals,” Vasquez said.
Political Context and Sovereignty Concerns
Recently, Panama’s ports have come under the microscope from Washington. Former US President Donald Trump has voiced his concerns about Chinese influence over the canal, even going so far as to threaten to reclaim the waterway and making unfounded claims that Beijing has control over it.
In response, Panama’s President Jose Raul Mulino has consistently emphasised that the canal is fully operated by Panamanians, asserting their national sovereignty. While China isn’t involved in the canal’s operations, it’s worth noting that CK Hutchison Holdings Ltd, based in Hong Kong, has been managing ports on both the Atlantic and Pacific sides for quite some time.
Capital Spending and Infrastructure Goals
The canal authority’s port initiative is part of a larger plan that proposes an impressive $8.5 billion capital investment over the next seven years. This includes projects like the LPG pipeline, a new water reservoir, and various road and highway improvements.
The existing ports, managed by CK Hutchison’s subsidiary Panama Ports Co., were concessioned back in 1997 and still rely on older technology. Vasquez mentioned that the authority is looking to introduce modern crane systems to boost efficiency and better compete with Colombia’s more advanced Port of Cartagena. “We believe we can leapfrog that situation, and we can try to do it differently,” Vasquez stated.
New Strategy and Concession Dispute
Mulino is rolling out a new national maritime logistics strategy aimed at transforming how ports operate. However, the comptroller has thrown a wrench in the works by challenging a concession extension from CK Hutchison, which complicates the sale of its global terminal to a group led by BlackRock.
Revenue Surge from Tariff-Driven Trade
Thanks to US tariffs, there’s been a surge in cargo shipments, pushing canal revenue close to $5 billion this year. However, projections indicate it might dip to $4.4 billion in the upcoming fiscal year.
On a brighter note, stronger rainfall has helped maintain the canal draft at 50 feet, providing some much-needed relief after two years of drought-related restrictions.
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Source: Business Standard
