July 7, 2006

Panama president sees canal expansion on budget

BOGOTA, Colombia (Reuters) - Panama's President Martin
Torrijos said on Friday he was confident an expansion of the
country's inter-oceanic canal would be completed within its
$5.25 billion budget as the figure includes $1.2 billion to
cover possible cost inflation.

Torrijos met Colombia's President Alvaro Uribe late on
Friday before heading to Venezuela on Saturday to meet with his
President Hugo Chavez to plan the construction of an underwater
natural gas pipeline to Panama.

On the cost of the canal expansion, Torrijos said: "There
is an important percentage contingent for inflation of $1.2
billion within the estimated cost of the project, which we
think is enough to face whatever adjustment needed to be done
during its development," Torrijos told reporters in Bogota.

Torrijos announced a $5.25 billion plan in April to add a
third lane of locks to the vital maritime route that carries
about 4 percent of world trade but which is nearing saturation
due to an increase in traffic.

The expansion would mean some $2.3 billion in new debt that
the canal authority would need to finance.

Torrijos also said that the country's parliament, which
still has to vote on the project, largely supports it.

"With the close communications that we have with parliament
I hope that they approve it," Torrijos said.

Once parliament approves the plan, the government will go
ahead with an obligatory referendum later this year. Polls show
most Panamanians support it.

Construction should be complete by 2014, exactly a century
after the canal was opened.