Panama spends billions of USD to expand metro network

Ever since it was opened, the expanded Panama Canal has brought growth to the Central American country's entire transport industry. Panama City's subway system is set to be the most visible example of this growth. The billion-dollar development project is going full speed ahead.

Aerial view of Panama City
Panama expands its transportation infrastructure.

The first line of the Metro de Panamá was opened in April 2014. Construction had already begun on a second line as well, and a third was put out to tender. Lines 1 and 2 each cost over 2 billion USD. There are also plans to extend both routes. The state metro operating company has budgeted USD 660 million for the current year. The public authorities have already published feasibility studies for an inter-urban train to be connected with the metro.

The city plans to expand its current network of 14 metro stations to 90 stations by 2040. 8 billion US dollars are budgeted for this task. The supplier of the metro cars and equipment for the first two lines is Alstom. Line 3 was financed by Japan International Cooperation Agency (JICA) and is to be based on a Japanese monorail system.

Billions of dollars are also budgeted for new container terminals. PSA International is currently expanding Rodman Harbor for USD 450 million. Around USD 800 million is also being used to expand Tocumen International Airport, Central America's largest and most modern airport. The only plan not to be realized is the expansion of an enormous new multi-use harbor, because of environmental concerns. The momentum that the canal expansion will cause for the logistics sector was one of the reasons that the rating agency Fitch raised the growth forecast for Panama's overall economy to just over 6% by 2018.

Opportunities for new subcontractors and suppliers

Due to problems with the Brazilian company Odebrecht, there could be a need for new subcontractors and suppliers in some of Panama's major construction projects. The leading company for the first two metro lines and other billion-dollar projects, Odebrecht is caught up in extensive corruption accusations in Panama and in other places on the continent. The government intends to exclude the Brazilian company from future tender invitations. This would also affect metro line 3 and the billion-dollar construction of a fourth bridge over the Panama Canal.

Panama still has USD 3.7 billion available for financing transport infrastructure projects from 2017 to 2019.

For more information on individual projects and tender invitations, please contact Ulrich Hinterberger, Consultant Latin America.


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