The Port of Cristobal. Panama Ports Company photo.
A renewal, not a renegotiation, with details perhaps to be learned later
by Eric Jackson
On June 23 the Maritime Authority of Panama (AMP) announced that it had accepted the Panama Ports Company taking the option of a 25-year renewal of the Balboa and Cristobal ports concession contract.
There is a promise for the company to pay $175 million in dividends for the past 25 years. By the original agreement Panama was to receive dividends bases on the profits and a fee for each container moved. As more ports came into service there was this race to the bottom in the name of parity — “equiparación” — which has settled out to be $12 for each container moved for all of the ports. There had been a prior agreement that opened the possibility of that fee going up to $19, but so far it’s not known if this is in the renewed contract. What has been specified by the AMP is that Panama will get at least $7 million a year.
The major objection raised from many directions was the structure of dividends based on profits. For 18 of the 25 years of the first contract Panama Ports paid nothing to Panama in terms of dividends, claiming that there were no profits as revenues were invested in improvements to the ports, particularly Balboa. For whatever concession, that sort of formula sets off alarm bells in many business analysts’ minds, as a company might, for example, say that they need the world’s highest-paid executives to remain competitive and that overhead meant no profits in a particular year. Also, Panama Ports is a subsidiary Hutchison, a Hong Kong based conglomerate that’s one of the world’s largest seaport companies. People with ideological suspicions will often cite various imagined or real China connections and read political or military intentions or the possibilities of these into the situation,. But more basic is the difficulty keeping up with the accounting of a multinational conglomerate to determine what Panama’s share should be.
Perhaps the most prominent critic of the extension is former Panama Canal Authority administrator Jorge Luis Quijano. He insisted that the port and shipping industries must “pay for our gold, which is our geographical position.” The labor/left FRENADESO alliance brushed off the income promised or projected by the AMP as “less than crumbs.” Former Panama City mayor and 2014 PRD presidential nominee Juan Carlos Navarro questioned why the ports concession was not put up for bids. That the deal was hammered out in secret and has yet to be published has aroused the ire of various pro-transparency and anti-corruption activists.
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