An ambitious $2-billion effort by the Panama Canal Authority to address the historic waterway’s dwindling freshwater supply has been restarted with a new tender set for release within two years. The agency now has contracted the U.S. Army Corps of Engineers to help define the scope of work for the forthcoming bid package—in a move bidders sought to reduce project risk. 

In its previous request for qualifications issued in 2020, the authority said the contractor would be responsible for program concept, design and construction—which was set to include identifying sites where component projects would be built, and managing needed investigations, surveys and studies, including those for hydrological, climatic and environmental conditions.

In June 2021, the authority announced it would completely revamp the bidding process, following more than 250 responses it received from contractors interested in participating.

Level of Risk

“Our conversations with the interested companies during the prequalification process allowed us to better understand the level of risk that the sector is willing to assume, and to improve the tender process to secure water in the quantity and quality needed for Canal operations and the population for decades to come,” authority administrator Ricaurte Vásquez Morales said in a statement at the time.

The Corps “was the clear partner that we could associate ourselves with to assist in producing the portfolio of projects we could put out in a bid,” Ilya Espino de Marotta, authority deputy administrator, told ENR.

The agency’s water management system program will consist of a portfolio of projects that would guarantee an adequate water supply, taking into account sustainable development, growth projections and the impact of climate change on the waterway. The authority and the Corps have conducted virtual meetings since the $11.4-million contract was signed last November. In-person meetings and inspections are planned for this spring.

The Corps is slated to complete work in 2024, with a bid package then released, according to the authority. It sets 2028 as a completion target for the portfolio of projects, although that effort could be accelerated, Espino de Marotta said.

Operations of the Panama Canal depend on sufficient water in Gatun Lake to allow passage of massive vessels that require as much as 50 ft of draft. The lake is part of a larger watershed that also is the main source of fresh water for about 2 million people—roughly half of the country’s total population. 

Several years of drought conditions led to historically low water levels in the lake, requiring vessel drafts to be limited to 44 ft in 2019. A container vessel can carry about 300 containers for each additional foot of draft.

In a 2020 report, the authority said rainfall in 2019 was 20% below the historic average. The $5-billion expansion of the canal, completed in 2016, also put pressure on water resources. About 50 million gallons of fresh water are lost through the locks to the Pacific and Atlantic oceans. 

Moving Forward

In response, the authority launched a series of efforts to mitigate water loss, including reducing the number of canal transits, limiting hydropower production of the Gatun Dam, and reusing water from prior passages whenever possible. The dam spillway was also adjusted to increase the lake water level.

The authority also introduced a permanent fresh water surcharge of $10,000 in early 2020 on all vessels longer than 125 ft. It includes a fee that increases in relation to water levels in the canal. The higher cost for passages helps limit the number of transits during periods of low water availability.

For the water program, contractors now will be presented with a conceptual design of the system to reduce the level of risk, improve cost estimates and enable better technical evaluation of proposals.

The plan is set to include elements such as creation of new reservoirs, construction of new water treatment plants and incorporation of new sources of natural freshwater transfer from river basins near the Panama Canal basin.