Panama Ports Company Contract Extended

The Panama Maritime Authority extended for a 25-year term and in favor of the Panama Ports Company, the contract for the development, construction, operation, administration and management of container terminals.

Thursday, June 24, 2021

The Board of Directors of the Panama Maritime Authority declared itself in permanent session as of May 27, 2021, for the purpose of analyzing compliance with Contract Law No. 5 of January 16, 1997, for the development, construction, operation, administration and management of container, ro-ro, passenger, bulk cargo and general cargo terminals with their respective infrastructure, installations, facilities and physical areas in the Ports of Balboa and Cristobal, between the State and the Panama Ports Company, S.A., according to an official statement.

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The document states that "... after more than 20 days of permanent session, today June 23, 2021 and after the presentations of the compliance audit reports by the Comptroller General of the Republic of Panama and the General Directorate of Ports and Auxiliary Maritime Industries of the Maritime Authority of Panama, in addition to the documental review and analysis of the projections of income to the State, the members of the Board of Directors unanimously recognize the fulfillment of the basic conditions of the contract and therefore authorize the Administrator of the Panama Maritime Authority to certify the validity of the second period of the concession contract."

In this second period of validity, the company will have to pay the State a minimum of $7 million per year in dividends, which will be formalized through the signing of a shareholders' agreement, and the rates for container movement of all container terminals in the Republic of Panama will be revised and updated, which will be effective as of 2022.

Based on the projections of income from tariffs (container movement, wharfage) and dividends from the contract in question, income to the State is estimated at over $800 million during the next 25 years, according to the new negotiations.

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