PANAMA CANAL

EXPANSION PROGRAM

MARCH 2013

EXPANSION PROGRAM COMPONENTS Post-Panamax Locks

Construction of the new Pacific and Atlantic lock complexes for Post-Panamax vessels transits. Each complex will feature three chambers, three water-saving basins per chamber, a lateral filling and emptying system and eight rolling gates.

Pacific Access Channel

Excavation of a new channel to connect the new Pacific locks with Culebra Cut. The project requires the excavation of nearly 50 million cubic meters of material. It was divided into four phases, of which the first three have already been completed.

Dredging of Navigational Channels

Deepening and widening of the existing navigational channels at the sea entrances to the Canal, Culebra Cut and Gatun Lake.

Improvements to Water Supply

Raising Gatun Lakes maximum operating level to improve Canal water supply and draft dependability.

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1. Gatun Lake

2. New Atlantic locks

3. Atlantic entrance dredging

PROJECTS
The Expansion Program registers 50% overall progress, as stated on the December 31st, 2012 Report to the Nation.

Computer rendering of the Pacific Access Channel.

PACIFIC ACCESS CHANNEL

Since September 2007, a 6.1 kilometer-long Pacific Access Channel, which runs parallel to Miraflores Lake, but separated from it, is being excavated to connect the new locks on the Pacific side and Culebra Cut. The project, which requires the removal of 50 million cubic meters of material, was divided into four phases, of which the first three have already been completed. Consortium ICA-FCC-MECO, in charge of the fourth phase, has reached the required depth for the navigation of deeper draft vessels along the channel and continues with the construction of a 2.3 kilometerlong dam necessary to make up for the 9-meter level difference with Miraflores Lake. Activities under this project have also included clearing of 400 hectares of land contaminated with unexploded ammunition (UXOs) left behind by the US military during its deployment in the Panama Canal Zone.

Excavation at the Borinquen dam site.

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4. Pacific entrance dredging

5. New Pacific locks

6. Miraflores Lake

7. Pacific Access Channel

8. Culebra Cut

Pacific entrance dredging.

DREDGING
To guarantee the safe navigation of post-Panamax ships along the Canals water route, the Expansion Program included dredging projects on both oceanic entrances, Culebra Cut and Gatun Lake. To date, deepening and widening activities on the Atlantic and Pacific entrances have already been concluded.

Pacific Entrance
This contract was awarded on April 1st, 2008 to Belgian company Dredging International Panama, S.A. (DI). The project consisted of the widening and deepening to 15.5 meters below mean low water level of the Canals Pacific entrance navigational channel. The work entailed dredging 8.7 million cubic meters of subaquatic material. DI deployed the DArtagnan, one of the worlds most powerful cutter-suction dredges, the Vlaanderen XIX and the hopper dredge Lange Wapper.

Atlantic Entrance
Dredging the 13.8 kilometer - long channel for the new Canal Atlantic entrance called for the removal of some 18 million cubic meters of material. The channel was widened from its original 198 meters to 225 meters. The contract was awarded to Belgian company Jan de Nul n.v. on September 25, 2009. The Panama Canal Authority exercised the option to deepen beyond the established 15.5 meters to 16.1 meters. A great variety of dredging equipment was deployed and rapid progress was achieved. Some of the dredges that tackled the work included the Marco Polo (cutter suction), the Filippo Brunelleschi (hopper) and the Vitruvius (backhoe).

Dredge Marco Polo working at the Atlantic entrance.

GATUN LAKE AND CULEBRA CUT

This project calls for the removal of 29 million cubic meters of material to straighten the sinuous curves of the Culebra Cut the narrowest part of the Canal- and deepening and widening of the navigational channel in Gatun Lake. Part of the work is being conducted by the Canal workforce using in-house equipment, and part by contractors Dredging International and Jan de Nul. In 2011, Jan de Nul completed dredging and excavation work to create the north entrance to the new Pacific Access Channel. The flooding of the area was conducted late that year. In the meantime, Dredging International finished dredging work of the northern reaches of Gatun Lake. To date, straightening of all reaches along Culebra Cut has been completed.

Culebra Cut dredging dredge Cornelius.

RAISING GATUN LAKES MAXIMUM OPERATING LEVEL

This component of the program consists of raising Gatun Lakes maximum operating level from 26.7 meters, to 27.1 meters to improve the Canals water supply. This improvement will increase reservoir capacity by approximately 165 million cubic meters of water and will require that adjustments and modifications be made to specific structures in the existing locks. As part of this project, the 14 gates of the Gatun spillway were extended and two additional gates were built at the Canals industrial dry dock. Moreover, two caissons were also acquired so maintenance of the higher gates can be conducted.

THIRD SET OF LOCKS - ATLANTIC SITE

1. Gatun Locks 2. Industrial Park Third Set of Locks 3. Watersaving basins 4. Gatun Lake 5. Construction site Third Set of Locks 6. Caribbean Sea 7. Jose Dominador Bazan community 8. Gatun Observation Center

Each lock complex one on the Pacific and one on the Atlantic side will have three chambers, water-saving basins, a lateral filling and emptying system, and rolling gates. Water-saving basin technology will allow the new locks to operate using 7% less water than the existing locks and reuse 60% of the water required for each transit. The lateral filling and emptying system will allow filling each lock chamber in 10 minutes whenever water-saving basins are not used, and in 17 minutes when they are included in the operation.

The new locks will require 16 rolling gates. These gates will operate from a recess located adjacent and perpendicular to the lock chamber. This configuration turns each recess into a dry dock, which can be used to service the gates on site without the need of removing them and without major interruptions to lock operations.

Pacific construction site.

DESIGN AND CONSTRUCTION OF THE THIRD SET OF LOCKS

The design and construction of the Panama Canals new locks is the most complex project under the Expansion Program. At a cost of $3.2 billion -60% of the programs total budgetthe contract was awarded to consortium Grupo Unidos por el Canal on July 15, 2009. The consortium, formed by Sacyr Vallehermoso S.A. from Spain; Impregilo SpA from Italy; Jan de Nul n.v from Belgium and Constructora Urbana, S.A. from Panama, initiated the works on August 25 of the same year. The project involves the design and construction of two locks complexes, one on the Pacific and the other on the Atlantic side. Each one will have three chambers, nine water-saving basins, a lateral filling and emptying system and eight rolling gates. The contractor is currently working on the structural concrete pouring of the walls and conduits of the locks, while embedding metal parts that will later fit control electromechanical equipment. The massive electromechanical parts that will control water flow as part of the locks operations are being built overseas. For instance, the first two shipments of valves arrived in Panamanian waters in December 2012 and January 2013, respectively, from the shipyards of Hyundai Samho Heavy Industries in South Korea. On the other hand, the 16 rolling gates are being fabricated in Italy by Cimolai, SpA. Shipping of the first four is expected by August of this year.

Reforestation project in Tapagra, Chepo.

Care for the environment is a priority under every project of the Expansion Program. A thorough monitoring and auditing plan guarantees that impacts to air, water and soil are mitigated in compliance with strict international standards. Each program component includes wildlife rescue and relocation activities in all areas in which projects are executed. To date, thousands of mammals, reptiles and birds have been rescued and relocated to protected areas. Moreover, the Panama Canal Authority has worked in collaboration with Panamas National Environmental Authority (ANAM) and the Aquatic Resources Authority (ARAP) to develop nine different reforestation projects within protected areas across the country. A total of 626 hectares have already been reforested in projects that go from Chiriqui, Panamas westernmost province, to Chepo, located East of Panama City. The more than 600,000 seedlings of native species already planted are at the care of local residents, who in addition to learning new reforestation and conservation techniques, have played an important role as part of the Expansion Program. The ACP has also contributed $3.7 million to ANAM and ARAP as ecological compensation.

ENVIRONMENT
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LOCATION OF REFORESTATION PROJECTS

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PALEONTOLOGICAL AND ARCHAEOLOGICAL RESEARCH

As the program evolves, archaeological and paleontological remains continue to be found in dredging and excavation areas. For instance, the list of findings includes a Spanish dagger from the 16th Century found in the Pacific Access Channel excavation, and pre-Columbian arrowheads and bottles dating back to the beginning of the 20th Century. The Smithsonian Tropical Research Institute (STRI) collaborates in the location and analysis of fossils found in all work areas.
Fossils of megalodon teeth (extinct species of shark from the Cenozoic Era).

Expansion update session.

ACCOUNTABILITY
In compliance with its responsibility to inform on the progress of the Expansion Program and as established by Law 28 of July 17, 2006, the Canal publishes quarterly reports with progress achieved under the program for auditing entities including the Executive Branch, the National Assembly, Panamas General Comptrollers Office and the Canals Adhoc Committee (formed by members of the civil society), as well as for multilateral financing agencies. The contents of these reports are available for public consultation in the Canals Internet page at www.micanaldepanama.com. The Expansion Program also established hotline 800-0714 and e-mail address ampliacion@pancanal.com to respond to queries regarding general information on the program and to respond to questions, concerns and suggestions made by the general public related to the execution of the works.

Regarding the environmental aspect, the Canal has established a strict environmental surveillance and auditing program to guarantee compliance with the programs environmental commitments.

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LABOR
Since the beginning of the works, the Expansion Program has created more than 28,000 direct jobs. The diversity of the activities and the introduction of innovative technology and equipment, have enabled formidable transfer of know-how to the local labor force. Throughout these five years, thousands of men and women have gained unique professional experience that has enabled them to contribute to building a better future for Panama and their own.

The labor force comes from all areas of the country.

FINANCING
The Panama Canal Authority signed agreements with a group of bilateral and multilateral financing institutions to procure financing of up to $2.3 billion required to complete the expansion of the waterway. With the authorization of the Cabinet Council, the Canal Board of Directors proceeded to subscribe financing agreements with the following institutions:

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