PANAMA CITY – The Panamanian government on Monday approved a proposal to expand the Panama Canal, which, if passed by Congress, will then be submitted to voters in a referendum.
“The Cabinet Council approved sending the bill to the National Assembly,” Panamanian President Martin Torrijos announced to the press.
Torrijos said that the Panamanian Constitution establishes that the referendum must be held at least 90 days after Congress approves the bill.
The President also announced that the government agreed to measures to guarantee the “transparency” of the project, including forming a broad-based commission that will receive quarterly reports on the contracting and construction process.
He said that “all costs of the construction and the corresponding financial obligations will be paid with funds generated by the operation of the Canal and through the increase in tolls.”
In order for the country to be competitive in today’s world, Panama needs to increase the potential of this inter-oceanic waterway, the President stressed.
He reaffirmed that the expansion of the Canal will not affect the income it transfers to the Panamanian government.
After several years of studies, the autonomous Panama Canal Authority presented the proposal to expand the Canal to the government on April 24.
The expansion will include building a third set of locks, which will increase the Canal’s cargo transport capability. Currently, about 5% of world trade passes through the waterway.
The authority says that work will begin on the project in 2007 and finish in 2014, when the Canal will have been in operation for a century.
Of the $5.25 billion the project is scheduled to cost, the authority will seek foreign financing for $2.3 billion, according to the proposal.
The authority also forecasts that the entire cost of the expansion, including paying off the foreign loan, will be covered by an increase in tolls.
This will be the first expansion of the Canal, which was built by the United States between 1904 and 1914 and administered by Washington until it was handed back to Panamanian control on Dec. 31, 1999.
The Canal’s transfer to Panama came in compliance with the 1977 treaty concluded between President Torrijos’ late father Omar – Panama’s strongman from 1968-81 – and U.S. President Jimmy Carter.