The Panamanian government is investigating whether the Chinese company holding the concession to operate canal ports is involved in collusion between officials and businesses, causing damage to Panama’s national interests. Over the years, the company has amended its contract three times, with negotiations shrouded in opacity, resembling a black box operation, resulting in losses of at least $1 billion US dollars (approximately NT$32 billion) for the Panamanian government.
The mainstream Panamanian media outlet “La Prensa” reported that the Chinese company “Panama Ports Company” (PPC), affiliated with Hong Kong’s “Cheung Kong Hutchison Industries,” obtained approval from the Panamanian government in January 1997 to run the key ports of Balboa and Cristobal at both ends of the canal for 25 years.
Initially, the “Panama Ports Company” promised to pay the government a fixed fee of $22.2 million US dollars annually along with 10% of the revenue. However, after the contract was revised in 2005, the provision for the fixed fee was removed, and the container handling fee was increased from $6 to $9 per container, with the company also required to invest in port improvements. The contract has been revised three times in total, with each revision appearing increasingly favorable to the “Panama Ports Company,” raising suspicions.
In 2010, the Panamanian government set the container handling fee at $12 per container and mandated a reevaluation of the contract terms every five years starting in 2013. However, nearly 12 years later, the fee has not been adjusted as required.
According to “La Prensa,” based on the $12 per container fee established in 2010, if adjusted in 2013, 2018, and 2023 according to the Consumer Price Index (CPI), the current cost of transporting each container should be around $16 instead of the current $12. While there are other foreign companies operating port facilities along the canal, the control of these two crucial ports by China has led to the Panamanian government missing out on at least $1 billion in tax revenue since 2010.
The previous Panamanian government repeatedly adjusted the contract terms to benefit the Chinese company. The negotiation conditions and process were kept non-transparent, with many documents classified as “confidential” by the previous government, preventing scrutiny by relevant authorities.
The “Panama Ports Company” has strongly opposed and attempted to prevent the Panamanian government from expanding port facilities near its Cristobal port, citing potential impacts on operational profits, sparking controversy over conflicts between national development and corporate interests.
Furthermore, since obtaining a 25-year concession to operate the canal ports in 1997, the “Panama Ports Company” secured another 25-year concession in 2021 via an “automatic renewal clause,” extending its rights until 2047. However, the current Panamanian President Mulino’s government believes that the lack of transparency in the port operations renewal process not only involves corruption but also may be part of China’s common practice of “debt-trap diplomacy” in promoting the Belt and Road Initiative globally, prompting an order for the audit department to investigate the company.