MercoPress. South Atlantic News Agency

Forty top banks want to finance Panama Canal works

Forty domestic and international banks have offered to finance the expansion of the Panama Canal including the building of three new locks, an overall investment estimated in 5.2 billion US dollars reports this week the Panamanian press.

Among the financial institutions figure HSBC, Citibank, JP Morgan, BNP Paribas, Scotiabank and Bank of Tokyo which are willing to come up with 2.3 billion US dollars for the "peak points" of the inter-oceanic channel expansion timetable.

According to the press the institutions are not only looking at the business side of the investment but "to figure in the list of co-financers of the largest infrastructure capital expenditure in recent history" opening the canal for Panamax and Post Panamax vessels, thus helping to better conditions for world trade.

Jose Barrios Financial Director of the Panama Canal Authority said that the financing plan is conditioned to the tolls policy which will be worked out and defined in the coming months, following the referendum approval last October 22 of the expansion project.

Barrios pointed out that if the Canal authorities decide to submit their finances to the scrutiny of risk assessment agencies, the Canal Authority will achieve a better qualification than that of the Republic of Panama's sovereign debt currently "investment grade".

However Ricaurte Vasquez president of the Panama Canal Board of Directors said last week that for the moment there's no interest in an investment grading from international risk assessment agencies.

He pointed out that Panamanian experts are working out a new set of tolls on which much of the financing of the works will depend. Apparently the issue has been discussed with users of the Canal and maritime companies' representatives.

Vasquez highlighted that in spite of the cost of the enlargement, the Canal could receive additional income to the tune of 300 million US dollars per year because a new waterway "reliable and clean" in line with the Kyoto Protocol, would significantly reduce pollution and crossing time for vessels.

World Bank analysts admit that the construction of the three new locks would reduce emissions of carbon dioxide by and estimated 30 million tons annually. In the international "green exchange market" a ton of carbon dioxide ranges between 10 and 12 US dollars per ton.