OBG talks to Roberto Roy, Minister for Canal Affairs, and CEO, Metro de Panamá

Roberto Roy, Minister for Canal Affairs, and CEO, Metro de Panamá

Interview: Roberto Roy

How much of Panama City’s $1m-a-day congestion cost will Metro Line 1 recoup?

ROBERTO ROY: While congestion has been a growing concern for years, it has been exacerbated by massive construction and development. We have tried to ease the burden caused by the ongoing construction of the Metro by working closely with stakeholders. For example, any shop owner who is adversely affected by the project is being compensated up to 50% of their rent for the duration of the disruption. Naturally, they will also realise the benefits to their businesses once the Metro is operational. With regards to recouping the investment, our economic studies have shown that the city will benefit from considerably shorter travel times that will increase efficiency, the time families can be together and safety, and decrease pollution. In summary, the city will be improved with the completion of these projects, the benefits of which are economic and social.

To what degree will the Metro integrate with other forms of transportation?

ROY: The Metro project is a result of the traffic congestion problem we currently have in Panama City. The idea is to have an integrated transport system, leveraging both the Metro and Metrobus networks. There are certain challenges to be addressed with the implementation of the new Metrobus, but I am confident that by the end of 2013, and certainly by the time the Metro is operational, these issues will have been addressed. Integration will not stop there: we are also planning to have an integrated pricing scheme and an electronic card that will be valid across both systems to improve efficiency and encourage passengers to use both platforms. We will also have one single financial administrator for both. To understand the need for public mass transportation, consider that 5000 new cars are sold in Panama City each month – they would form a queue more than 25 km long if placed in a line. Building new roads to accommodate this influx of vehicles is impossible, so creative solutions are very important.

What pricing models are being considered and will the business model be a key factor in financing overall expansion costs?

ROY: Having done the necessary studies and due diligence, we have concluded that the Metro and Metrobus will require a level of subsidy for a set period to maintain a price that is fair to our citizens. On the other hand, the broader economic study, which takes into account efficiency gains as well as social and environmental factors, makes it clear that the benefits are substantial. The reduction in travel times alone will have an immense impact, considering the number of hours currently lost by commuters and the economy in general.

The benefits will only increase with the expansion of both networks. The exact subsidy figure will factor in the integration cost of the Metro with the Metrobus, as the fares themselves will be integrated. This will account for the need to re-route the present Metrobus system to better feed the Metro. We will be in a position to announce the fares by the end of September 2013. Future expansions will be financed with different vehicles, like public-private partnerships.

When do you expect the tendering process for Metro Line 2 to begin?

ROY: We expect it will take place in early 2014. This line will run east towards the international airport and have a total length of 22 km. We are anticipating a strong level of interest from a wide range of international companies. The eventual expansion of the network to also include Line 3 will also require a new, multi-modal, fourth bridge to be built over the Panama Canal.

All of these projects will need to be completed in the short to medium term and to be tendered on the open market once all the necessary studies have been completed. The financing of Metro Line 3, together with the fourth bridge over the canal, is being discussed presently with the Japan International Cooperation Agency. It is envisioned to be as long as 30 km and the construction phase is likely to be divided into two stages.

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The Report: Panama 2014

Transport & Logistics chapter from The Report: Panama 2014

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