Semi-automatic renewal

Panama Maritime Authority considers renewing Hutchinson Whampoa's port concession.

Hutchinson Whampoa’s concession for the ports of Balboa in the Pacific and Cristóbal in the Atlantic, through its subsidiary Panama Ports Company (“PPC”), is up for renewal. At least, that’s what PPC will be hoping.

A maritime economist gave us the local view, “The Panamanian government is in talks with PPC but there are some points for discussion. PPC believes there should be an automatic 25-year extension because they have met the conditions of the contract over the previous 25 years. However, many people in Panama want to see an international tender, complaining that PPC has contributed very little to Panama.” The Comptroller General office will determine if the contract conditions have been met throughout the last 25 years.

Despite these dissenting voices, there is little expectation of a tender being launched according to a maritime industry executive, “There is no certainty yet but from what I’ve heard, it seems the government and PPC are heading towards a renewal. This is not in the best interests of the country but the government is weak at the moment, as a result of the pandemic, so I think they will go for the easiest and safest option.”

“There is no certainty yet but from what I’ve heard, it seems the government and PPC are heading towards a renewal. This is not in the best interests of the country.”

Executive, Maritime industry, Panama

The Panamanian newspaper La Estrella apparently had access to the draft concessionary contract and so believed the country is unlikely to see a third concessionary company replacing PPC, which will likely get a 25-year extension.

US diplomats have put pressure on the Panamanian government around the issue of concessions being given to Chinese companies but the US is offering no alternative according to the maritime economist, “The US won’t like it but they are not participating or offering better terms. Hutchinson Whampoa is a Fortune 500 company and one of the largest in Hong Kong and has the backing of the Chinese government; it isn’t easy to remove them from a contract that anticipates a renewal.”

“The US won’t like it but they are not participating or offering better terms. Hutchinson Whampoa is a Fortune 500 company and one of the largest in Hong Kong and has the backing of the Chinese government.”

Maritime economist, Panama

Various Panamanian port stakeholders including the Logistics Business Council have called on the government and the Maritime Authority of Panama (“AMP”) to renegotiate the concession contract but, “the economic situation has the government cornered,” said the maritime industry executive, “and I can’t see people coming out to protest ‘en masse’ since both, the political parties and the civil society groups, are quite disjointed.”

A local policy expert on maritime issues believed the government should focus on what is best for Panama, “Everything is negotiable, regardless of the interests of the other countries. The most important thing is that the best interest of the Panamanian State must prevail. What was agreed 25 years ago cannot be the basis for what we do for the next 25 years, the country needs to get a better deal.”

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