Three international consortia bid for Panama Canal locks

The Panama Canal Authority has received proposals from three consortia to construct new locks on both sides of one of the world’s busiest shipping canals.

The three bidding groups are Consorcio CANAL, led by Spanish construction and concession firm ACS;  Grupo Unidos por el Canal, led by Spanish construction and concession firm Sacyr Vallehermoso; and Consortium Bechtel, Taisei, Mitsubishi Corporation, led by engineering and construction firm Bechtel. Each contains a number of other international construction and engineering firms.

The Panama Canal: bracing for expansion

Locks are water chambers used to raise and lower ships between stretches of water at different levels. The Panama Canal’s two existing sets of locks lift ships 85 feet to the main elevation of the canal. The locks cannot accommodate larger ships that were developed in the decades after the canal opened for traffic, known as post-Panamax vessels.

The Panama Canal can currently accommodate vessels with maximum capacity of 4,500 twenty-foot equivalent units (TEUs), a standard of measure equivalent to the volume of a twenty-foot long shipping container. The largest container vessels in the world now carry more than 14,000 TEUs.

The winning bidder will win a contract to design, build, and maintain for three years new locks on the canal’s Atlantic and Pacific outlets. Roughly the length of four soccer fields, the locks will be able to accommodate 12,600 TEU container ships.

The contract will be awarded on a “best value” basis to the bid that maximises points for technical specifications (55 percent of the evaluation criteria) and bid price (45 percent).

A 15-member committee will evaluate the bids in the coming months and hold a public forum to examine the price proposed by each consortium by midyear.

The project is part of a larger $5.25 billion expansion program for the canal – the largest infrastructure project under development in Latin America. In addition to the construction of the post-Panamax locks, the program includes plans for dredging of the canal entrences, deepening and widening of its existing channels and raising the maximum operating level of Gatun Lake, which provides fresh water for the waterway. The expansion will double the canal's capacity, the authority estimates.

The authority plans to raise about $2.3 billion of the project cost in loans and finance the remainder with cashflows generated by the operation of the canal.

The Inter-American Development Bank has previously approved a loan of up to $400 million toward the expansion. Other multilateral and development agencies that have committed debt financing toward the project include the Japan Bank for International Cooperation ($800 million), the European Investment Bank ($500 million), Corporación Andina de Fomento ($300 million) and the World Bank's International Finance Corporation ($300 million).

More than 14,000 ships travel through the canal each year, equivalent to about 5 percent of the world's annual seaborne freight.