Panama Canal Transition Planning and Growth Strategy Development

At noon, December 31, 1999, Panama will accept stewardship for the Panama Canal from the United States. As one of the major international trade routes, the continued reliability of the Canal is of critical concern to the United States, Panama and the international maritime community. To ensure an orderly transition, Panama established a Presidential Commission on Canal Affairs in 1992 to prepare for the canal's transfer. As Panama intends to preserve as much as possible of the canal's existing organizational framework, including administrative systems, organizational rules, practices and policies, the Commission, with the assistance of The Louis Berger Group (Berger), prepared a Transition Plan to ensure a seamless transfer. The strategic plan clearly defines the steps and responsibilities for each aspect of the transfer, so that Canal operations are unaffected. As part of this historic effort, Berger provided a Strategy Development Team (SDT) to review the then-current situation, define the critical issues associated with the transfer and assist in the formulation and analysis of alternative institutional arrangements as well as an appropriate time frame for implementation. The Team also recommended that, beginning in 1997, a five-year financial plan be prepared to determine the long-term capital requirements of the Canal Authority.

The strategic plan sets forth Panama's goals, objectives and policy directions and a mission statement for the new organization. The plan evaluated such issues as size, term, criteria for appointment and role of the new Board of Directors, and proposed a decision-making and coordination process during the transition, a communications and public education strategy, as well as the recommended implementation schedule and budget. After considering various approaches ranging from a government agency to a quasi-public or private-public corporation, the Commission proposed that the new entity be autonomous in financial, budgetary, personnel and regulatory matters; apolitical in organization and operations; entrepreneurial in management structure; and socially responsive to the nation's priorities and economic development strategies. The plan also recommended legal, organizational and financial policies, as well as administrative procedures for personnel, procurement, budgeting and management information systems.

The Panamanian Presidential Commission on Canal Affairs formally presented the strategic plan to the President of the Republic of Panama on April 26, 1994, and a Constitutional amendment was approved in the Panama National Assembly which set the framework for establishing such an entity.

Following the well-received Transition Plan, the Panama Canal Commission (PCC), the U.S. agency that operates the Canal, selected The Louis Berger Group as one of the teams to study and develop a multi-year (1998-2008) growth strategy for the canal's core transit services and to identify new business opportunities. The growth strategy will contribute to the long-term viability of the Canal and ensure its value to worldwide maritime and trade interests well into the next century. Results from the Berger study will provide the Commission Board and management with recommendations for improving the current core business and the agency's toll assessment procedures. It will also identify opportunities for optimizing existing operating capabilities and identify new opportunities, building on the organization's competitive advantages.

In defining the canal's growth potential and preparing the proposed growth strategy, the Team analyzed current levels and quality of services, including access time and costs, identified possible changes or improvements to the canal's transit services that could result in increases in transit volume and toll revenue and reviewed the agency's toll and tariff systems and procedures. In considering new opportunities, the Team identified several business opportunities where the Canal has a competitive advantage and/or where existing skills, equipment and infrastructure could be used in commercial ventures. Throughout this effort, Berger is working closely with senior Commission staff, GOP agencies and private interests to review potential business opportunities in reverted areas which could efficiently co-exist with the canal's current services.

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