Panama Canal Expansion Draws 3 Bidders; 1 Drops Out

By Eric Sabo
March 3, 2009

March 3 (Bloomberg) -- Panama's Canal Authority received three bids for a $3.2 billion project to build a new set of locks, part of an effort to accommodate larger ships, after one group failed to submit a proposal.

The bidders represent 20 companies, including Mexico's Empresas ICA SAB, Japan's Mitsubishi Corp. and Bechtel Group Inc., the largest U.S. engineering company. France's Bouygues Travaux Publics led the group that qualified to bid and then didn't present an offer at a ceremony in Panama City today.

That alliance, which also included Germany's Bilfinger Berger AG, had expressed concern about the changes in the contract requirements, Canal Authority Chief Executive Officer Alberto Aleman said.

"We respect their decision not to participate," Aleman said in a conference call with reporters. "Three out of four proposals is a good success rate for a project like this."

A Bouygues spokesman, Hubert Engelmann, said he wasn't able to immediately comment on the reason for withdrawing the bid.

The locks expansion accounts for more than half of the $5.2 billion budget for doubling the size of the 94-year-old canal linking the Pacific Ocean and the Caribbean Sea. The project, due to be completed in 2014, may face delays because of its complexity and a slowdown in world trade, said Robert McMillan, a former chairman of the Panama Canal Commission.

"This is a massive campaign," said McMillan, who served on the canal's board from 1989 to 1994, in a phone interview.

The winning bidder will build two separate locks at both entrances of the canal, allowing larger vessels to navigate the 50-mile waterway. About 27 percent of the world's container ships are too big for the canal, a figure that will rise to 37 percent by 2011, the waterway's authority has said.

The technical designs will be analyzed first, before an examination of the prices, Aleman said today. The contract for the locks is to be awarded "sometime in June," he added.