ACP to adjusts tender terms of Corozal

Por Franklin Castrellón

 With authorization of the Board of Directors, the administration of the Panama Canal Authority (ACP) will make an assessment of the terms originally proposed for the concessionaire of the construction and development of the container port of Corozal West, at the Pacific entrance of the Canal.

The Panama Chamber of Shipping (CMP) through its president, Rommel Troetsch, had made some observations that, according to the report, the administrator of the ACP, Jorge Quijano, said “we will be taking into account about the potential stakeholders in the future”. Troetsch’s observations were published in the edition of April 3, 2017.

A second chance for the Port of Corozal?

A second chance for the Port of Corozal?

One of the recommendations made by the CMP is that the Corozal terminal should receive the same incentives that are currently granted to the other transshipment ports.

Quijano recalled that at the end of 2015, the ACP presented a Bill to extend the tax incentives offered to Manzanillo International Terminal (MIT), Panama Ports Co. (operator of the ports of Balboa and Cristóbal), Colon Container Terminal (CCT) and PSA Panama International Terminal.

However, the project was rejected after Panama Ports Co. (PPC) a subsidiary of Hutchison Port Holdings in Hong Kong, lobbied against the Corozal project. Although PPC claims that the new terminal is not necessary, the fact is that the company has made every effort to obtain the land of the ACP where the port of Corozal will be developed.

Quijano warned that since the initial rejection of the project (the government plans to present it again in the legislature that begins in July 2017) many events have occurred “such as the increase in the capacity of the ports of Cartagena and Buenaventura, in Colombia, the termination of the Lázaro Cárdenas terminal in Mexico, and the construction of the ports of Moín in Costa Rica and Quetzal in Guatemala “which are preparing to compete with Panama for transshipment cargo.

Another factor that has entered the market is that, following the collapse of Hanjin Line, one of the shipping companies that prequalified to build and develop Corozal, acquired a shareholding in a US port, and plans to concentrate its transshipment operations on a Caribbean island.

The potential for transshipment, particularly on the Pacific coast, has skyrocketed since the start of operations of the expanded Canal, on June 26, 2016. This is due to the fact that it has the capacity to serve vessels much larger than those that can transit the old locks, and the shipping companies prefer – for economic reasons – to combine the direct services with the feeders.

The Pacific entrance of the Panama Canal.

The Pacific entrance of the Panama Canal.

Quijano explained that now that the Board of Directors has approved the closure of the bidding process for the concession, the ACP is totally free to address not only the firms that prequalified, but also other potential stakeholders, to come up with ideas on the adjustments to be made. This could make the port more attractive with the option to build and operate the Corozal terminal.

“The process of identifying these changes will begin this week (May 8-12) and it will take a few months to get the full offer reviewed,” he added. “In the meantime, we are confident that the Supreme Court will issue judgments on the appeals that have been filed, in particular on the claims of unconstitutionality,” he said.

The Chamber of Shipping president reiterated that Corozal “should enjoy the same economic conditions as other port operators, or that they are very similar in cost, since the objective should not be to make money with the concession but to attract investment for developing the logistics hub, generating jobs, foreign exchange and wealth for Panama.”

After noting that “Panama is the best place on the continent for transshipment operations”,

Troetsch said that greater support from the Executive is required to carry out the project. “Without State support the project) will not be possible,” he said.

According to the Economic Council for Latin America and the Caribbean (ECLAC) 47 million containers (TEUs) are moving in Latin America, of which 33 million are in Panama’s area of influence, but Panama’s ports barely handle about 10%. “All this indicates that there is transshipment, but it has to be attracted to Panamanian ports with competitive costs,” he added.

Troetsch believes that the country would gain far more benefits than it would lose if it eliminates the costs of Customs, MIDA and AUPSA charging for the transshipment cargo. “We would have the most competitive and attractive transshipment ports in the region,” he said.

Leave a Reply

Your email address will not be published. Required fields are marked *