By the project, the shipping volume will double in the canal
Japanese financial institutions have agreed in principle with the Panama Canal Authority to provide 800 million dollars for a project to widen the canal to alleviate congestion in it, it was learned Saturday.
According to sources, of the 800 million dollars, the Japan Finance Corporation's Japan Bank for International Cooperation will provide 400 million dollars, and Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp. and others will provide the remaining 400 million dollars through joint financing.
The Panama Canal is a major artery connecting the Atlantic Ocean to the Pacific Ocean. However, the canal is chronically congested, causing a wait time of several days for ocean vessels wanting to enter it.
To help solve the problem, excavation of trenches along both sides of the 80-kilometer-long canal began in 2007, to be completed in 2014, the 100th anniversary of the opening of the canal.
The Panama Canal Authority plans to procure 2.3 billion dollars of the total project cost of 5.25 billion dollars from overseas, from such sources as Japanese financial institutions and the Inter-American Development Bank.
The Japanese financial institutions determined they would be able to recoup their loans as the Panama Canal Authority has begun raising the canal's tolls, according to the JBIC's Americas Finance Department. Japan is the third most frequent user of the canal, following the United States and China.
A consortium of Taisei Corp. and Mitsubishi Corp., both Japanese companies, and U.S.-based Bechtel Corp. has announced its plan to undertake the widening project.
With its completion, the shipping volume will double in the canal, and more types of vessels will be able to use it, including mid-size oil tankers and liquefied natural gas carriers in addition to the current container vessels.
The project is also expected to drastically reduce the time it takes to transport oil from Latin American countries, which is usually transported via the Cape of Good Hope off South Africa.