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posted 20 Oct 2008

Deal news

IADB agrees $400m loan for Panama Canal

The Inter-American Development Bank (IADB) has approved a loan of up to $400m to support the expansion and development of the Panama Canal.

The loan has been signed with the Autoridad del Canal de Panama (ACP), the state-owned organisation that manages and operates the valuable 77km canal that links the Atlantic and Pacific oceans.

ACP will raise a further $2.3bn in loans to further finance the programme, which will cost up to $5.25bn.

The investment is necessary as the canal, which carries about 5% of the world’s seaborne freight annually, is approaching maximum capacity and is unable to carry the biggest container ships now plying the world’s sea lanes. The Panama Canal’s locks can currently take ships with a maximum capacity of 4,500teu. The new locks will be able to accommodate up to 12,600teu container ships. The modernisation programme comprises four key parts:  

• The construction of a third set of locks;
• Dredging of the entrances to the Canal at both ends;
• The deepening and widening of the existing navigation channels;
• Raising Gatun Lake, which provides fresh water for the Canal, to the maximum operational level.

The programme is scheduled to finish by 2014 – when the Canal will have been operating for 100 years.