panama canal

Fuel costs affect expansion

Rising fuel costs are expected to increase the costs of the Panama Canal expansion.

The first phase of the $5.25 billion project , however, is under budget, officials said.

David Mesa/LA PRENSA

big dig:Rising fuel prices are expected to have an impact on the overall cost of the Panama Canal expansion, though officials say the first phase of the project is within budget.1018757

The noise of heavy equipment never ends on Paraíso hill above the Panama Canal.

About 50 dump trucks, backhoes and other construction vehicles move like ants to perform the task of digging and hauling away 7.4 million cubic meters of the hillside that is part of the first phase the Panama Canal expansion.

Constructora Urbana, S.A. (Cusa) was awarded a $41 million contract to do the work. Company president Rogelio Alemán said the contract, however, may end up costing his company more because of rising fuel prices.

"It is difficult because the contract does not include a clause that deals with rising fuel prices," Alemán said during a tour of the site yesterday with President Martín Torrijos.

Fuel is not an insignificant expense. An excavator burns 50 gallons of diesel per hour, and it digs 20 hours a day.

Alberto Alemán Zubieta, the administrator of the Autoridad del Canal (ACP), acknowledged that the energy crisis will have an impact on future contracts issued by the agency, but nothing can be done about deals that have already been approved.

"It's a risk taken by the contractor," he said.

So far, the three major contracts issued for the first phase of the project, which include two for excavation and one for dredging, are still within the budget set aside for ther work.

About 1.9 cubic meters of material has been removed, enough to fill 250 soccer fields with dirt a meter deep. Paraíso hill has been reduced from 136 meters to 72.5 meters. But there is still a lot of digging to do as the hill will eventually be reduced to 46 meters.

The Canal expansion is expected to take between seven and eight years, with a projected completion date of 2015.

It involves building a new set of locks and increasing the depth and the width of the waterway. This will allow it to accomodate larger cargo vessels.

The project will cost an estimated $5.25 billion, but that figure could increase dramatically if the price of fuel and construction materials continues to go up.

Opponents of the project believe that the ACP drastically underestimated the cost of the project to begin with, and think the price tag would have been much higher even if the price of fuel and materials had not increased.