Indian cos see $5 bn biz in Panama
Two consortia of Indian industrial houses and financial consultants are eyeing $5.25-billion business opportunity across the Atlantic as the Panama government finalises plans to widen the 100-year old Panama canal.
By Girish Kuber, TNN |
MUMBAI: Two consortia of Indian industrial houses and financial consultants are eyeing $5.25-billion business opportunity across the Atlantic as the Panama government finalises plans to widen the 100-year old Panama canal.
“The Panama government is looking at Indian consultants for project management. We are in talks with a number of industrial and business groups,” Panama ambassador Alberto Pinzon M told ET.
Having completed initial rounds of discussion with a number of Indian entrepreneurs, Mr Pinzon expects the process to get over in a couple of months. “We are looking forward to Indian partnership in the historic endeavour,” he said.
The project is expected to be complete in 8-10 years and it will be the concerned firm’s responsibility to raise the necessary funds. The projections suggest that the whole cost could be recovered in 10-12 years after its completion.
The-78 km-long canal, that contributes over 10% of the country’s gross domestic product (GDP), has been a lifeline for Panama’s economy. Currently, with 85% capacity, the canal handles 13,800-14,000 large vessels per year, carrying more than 280 million tonnes of cargo.
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It is expected to peak its capacity between 2009 and 2012 and, hence, the expansion has been undertaken. After widening, the canal capacity will rise to 520 million tonnes from 280 million tonnes.The expansion entails building another lane parallel to the existing one alongwith constructing three wider locks at the Atlantic and Pacific ends of the canal. “These will double the canal’s capacity,” Mr Pinzon said.
The project would double the waterway’s capacity and accommodate ships about twice as big as the current maximum of 65,000 tonnes. Many mega ships in use today exceed 1,50,000 tonnes — much larger than what engineers envisioned when the Panama Canal was constructed more than 100 years ago, Mr Pinzon explained.
Besides, the renewed canal will be slightly deeper to accommodate ships that have drafts between 49 ft and 65 ft deep. The Panama Canal now has a draft maximum of 39.4 ft.
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“The canal is very dear to us,” Mr Pinzon said, so dear that any change or modification to canal requires a national referendum, according to the Panama Constitution.Accordingly, a nationwide referendum has been scheduled for October 22, which Mr Pinzon thinks is a ‘mere formality’. So far, all opinion polls have suggested overwhelming support for the widening, he says.
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Built by the US, the canal was handed over to the Panama government in 1999 and continues to be a crucial link connecting the Atlantic to the Pacific Ocean. The US in 1999 signed an agreement with the then-new state of Panama by which the United States guaranteed the independence of Panama and secured a perpetual lease for the canal.Panama was to be compensated by an initial payment of $10 million and an annuity of $250,000, beginning 1913. However, the process to return the canal to Panama government began during Jimmy Carter’s presidency and was completed in 1999.
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