request for proposals feasibility study for the panama ... · pdf filepanama canal authority...

REQUEST FOR PROPOSALS

FEASIBILITY STUDY FOR THE

PANAMA CANAL LNG TERMINAL PROJECT

Submission Deadline: 2:00 PM

LOCAL TIME (PANAMA CITY, PANAMA)

FEBRUARY 16, 2016

Submission Place: Luz M. Méndez

Contracting Officer Purchasing, Warehousing and Inventories Division Panama Canal Authority Building 710 Balboa, Ancón Panama City PANAMA Phone: + (507) 272-1587

SEALED PROPOSALS SHALL BE CLEARLY MARKED AND RECEIVED PRIOR TO THE TIME AND DATE SPECIFIED ABOVE. PROPOSALS RECEIVED AFTER SAID TIME AND DATE WILL NOT BE ACCEPTED OR CONSIDERED.

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REQUEST FOR PROPOSALS

SECTION 1: INTRODUCTION ...................................................................................4 1.1 BACKGROUND SUMMARY ................................................................4 1.2 OBJECTIVE ............................................................................................5 1.3 PROPOSALS TO BE SUBMITTED ......................................................5 1.4 CONTRACT FUNDED BY USTDA ......................................................5

SECTION 2: INSTRUCTIONS TO OFFERORS .........................................................6 2.1 PROJECT TITLE.....................................................................................6 2.2 DEFINITIONS .........................................................................................6 2.3 DEFINITIONAL MISSION REPORT ....................................................6 2.4 EXAMINATION OF DOCUMENTS .....................................................6 2.5 PROJECT FUNDING SOURCE .............................................................6 2.6 RESPONSIBILITY FOR COSTS ...........................................................7 2.7 TAXES .....................................................................................................7 2.8 CONFIDENTIALITY..............................................................................7 2.9 ECONOMY OF PROPOSALS................................................................7 2.10 OFFEROR CERTIFICATIONS ..............................................................7 2.11 CONDITIONS REQUIRED FOR PARTICIPATION ............................7 2.12 LANGUAGE OF PROPOSAL ................................................................8 2.13 PROPOSAL SUBMISSION REQUIREMENTS ....................................8 2.14 PACKAGING ..........................................................................................8 2.15 OFFEROR'S AUTHORIZED NEGOTIATOR .......................................9 2.16 AUTHORIZED SIGNATURE ................................................................9 2.17 EFFECTIVE PERIOD OF PROPOSAL .................................................9 2.18 EXCEPTIONS .........................................................................................9 2.19 OFFEROR QUALIFICATIONS .............................................................9 2.20 RIGHT TO REJECT PROPOSALS ........................................................9 2.21 PRIME CONTRACTOR RESPONSIBILITY ........................................9 2.22 AWARD ..................................................................................................10 2.23 COMPLETE SERVICES.........................................................................10 2.24 INVOICING AND PAYMENT ..............................................................10

SECTION 3: PROPOSAL FORMAT AND CONTENT ..............................................11 3.1 EXECUTIVE SUMMARY .....................................................................11 3.2 U.S. FIRM INFORMATION ...................................................................11 3.3 ORGANIZATIONAL STRUCTURE, MANAGEMENT, AND KEY

PERSONNEL ..........................................................................................12 3.4 TECHNICAL APPROACH AND WORK PLAN ..................................12 3.5 EXPERIENCE AND QUALIFICATIONS .............................................12

SECTION 4: AWARD CRITERIA ...............................................................................14

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ANNEX 1 FEDBIZOPPS ANNOUNCEMENT ANNEX 2 PORTIONS OF BACKGROUND DEFINITIONAL MISSION REPORT ANNEX 3 USTDA NATIONALITY REQUIREMENTS ANNEX 4 USTDA GRANT AGREEMENT, INCLUDING MANDATORY CONTRACT CLAUSES ANNEX 5 TERMS OF REFERENCE (FROM USTDA GRANT AGREEMENT) ANNEX 6 U.S. FIRM INFORMATION FORM ANNEX 7 GRANTEE NON-DISCLOSURE AGREEMENT

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Section 1: INTRODUCTION The U.S. Trade and Development Agency (“USTDA”) has provided a grant in the amount of US$878,800 to the Panama Canal Authority (Autoridad del Canal de Panamá, “ACP”) (the “Grantee”) in accordance with a grant agreement dated June 26, 2015 (the “Grant Agreement”) to fund a feasibility study (“Feasibility Study”) for the Panama Canal LNG Terminal Project (“Project”) in Panama (“Host Country”). This Feasibility Study will allow the Grantee to assess the development of a liquefied natural gas (“LNG”) import terminal and the use of LNG as a potential fuel source for ACP tugboats and dredges, vessels transiting the Panama Canal, and electrical power generation. The Grant Agreement is attached at Annex 4 for reference. The Grantee is soliciting technical proposals from qualified U.S. firms to provide expert consulting services to perform the Feasibility Study.

1.1 BACKGROUND SUMMARY When the new sets of locks open in 2016, the Panama Canal will be able to handle a significant increase in LNG tanker traffic. Currently, only four percent of the world’s fleet of LNG tankers can fit through the Panama Canal. With the completion of the canal expansion project, that number is expected to increase to 89 percent. The Grantee is interested in developing LNG-related infrastructure to capitalize on the projected increase in LNG tanker traffic resulting from the expanded canal. The goal of the Feasibility Study is to develop a strategic development plan for LNG infrastructure and natural gas utilization at the Panama Canal, with specific recommendations to:

Develop a comprehensive strategy for the development of LNG facilities on canal property;

Define effective policies, standards, and procedures to guide and support the Grantee’s LNG development program;

Evaluate new services and applications derived from the increased availability of natural gas supplies in Panama; and

Provide an implementation plan, including project schedules, budgets, and equipment recommendations.

Specifically, the Feasibility Study will assess the following items:

LNG import terminal infrastructure, siting, and technology requirements; Type of LNG tankers that would supply an LNG import terminal; LNG storage requirements; Pipeline infrastructure and connections; LNG distribution systems; LNG bunkering facilities for vessels; LNG truck and rail loading, and fueling facilities; Satellite facilities for LNG storage; and

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LNG supply costs and potential suppliers. Portions of a background Definitional Mission are provided for reference in Annex 2.

1.2 OBJECTIVE The objective of the Panama Canal LNG Terminal Feasibility Study is to assess and plan the development of LNG-related projects for the Panama Canal Authority. The Terms of Reference (“TOR”) for this Feasibility Study are attached as Annex 5.

1.3 PROPOSALS TO BE SUBMITTED Technical proposals are solicited from interested and qualified U.S. firms. The administrative and technical requirements as detailed throughout the Request for Proposals (“RFP”) will apply. Specific proposal format and content requirements are detailed in Section 3. The amount for the contract has been established by a USTDA grant of US$878,800. The USTDA grant of US$878,800 is a fixed amount. Accordingly, COST will not be a factor in the evaluation and therefore, cost proposals should not be submitted. Upon detailed evaluation of technical proposals, the Grantee shall select one firm for contract negotiations.

1.4 CONTRACT FUNDED BY USTDA In accordance with the terms and conditions of the Grant Agreement, USTDA has provided a grant in the amount of US$878,800 to the Grantee. The funding provided under the Grant Agreement shall be used to fund the costs of the contract between the Grantee and the U.S. firm selected by the Grantee to perform the TOR. The contract must include certain USTDA Mandatory Contract Clauses relating to nationality, taxes, payment, reporting, and other matters. The USTDA nationality requirements and the USTDA Mandatory Contract Clauses are attached at Annexes 3 and 4, respectively, for reference.

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Section 2: INSTRUCTIONS TO OFFERORS

2.1 PROJECT TITLE The project is called the “Panama Canal LNG Terminal Project.”

2.2 DEFINITIONS Please note the following definitions of terms as used in this RFP.

The term "Request for Proposals" means this solicitation of a formal technical proposal, including qualifications statement. The term "Offeror" means the U.S. firm, including any and all subcontractors, which responds to the RFP and submits a formal proposal and which may or may not be successful in being awarded this procurement.

2.3 DEFINITIONAL MISSION REPORT USTDA sponsored a Definitional Mission to address technical, financial, sociopolitical, environmental, and other aspects of the proposed Project. Portions of the report are attached at Annex 2 for background information only. Please note that the TOR referenced in the report are included in this RFP as Annex 5.

2.4 EXAMINATION OF DOCUMENTS Offerors should carefully examine this RFP. It will be assumed that Offerors have done such inspection and that through examinations, inquiries, and investigation they have become familiarized with local conditions and the nature of problems to be solved during the execution of the Feasibility Study. Offerors shall address all items as specified in this RFP. Failure to adhere to this format may disqualify an Offeror from further consideration. Submission of a proposal shall constitute evidence that the Offeror has made all the above mentioned examinations and investigations, and is free of any uncertainty with respect to conditions which would affect the execution and completion of the Feasibility Study.

2.5 PROJECT FUNDING SOURCE The Feasibility Study will be funded under a grant from USTDA. The total amount of the grant is not to exceed US$878,800.

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2.6 RESPONSIBILITY FOR COSTS Offerors shall be fully responsible for all costs incurred in the development and submission of the proposal. Neither USTDA nor the Grantee assumes any obligation as a result of the issuance of this RFP, the preparation or submission of a proposal by an Offeror, the evaluation of proposals, final selection, or negotiation of a contract.

2.7 TAXES Offerors should submit proposals that note that in accordance with the USTDA Mandatory Contract Clauses, USTDA grant funds shall not be used to pay any taxes, tariffs, duties, fees, or other levies imposed under laws in effect in the Host Country.

2.8 CONFIDENTIALITY The Grantee will preserve the confidentiality of any business proprietary or confidential information submitted by the Offeror, which is clearly designated as such by the Offeror, to the extent permitted by the laws of the Host Country. The Grantee will require the best qualified Offeror to sign a non-disclosure agreement, a template of which is included for reference in this RFP as Annex 7.

2.9 ECONOMY OF PROPOSALS Proposal documents should be prepared simply and economically, providing a comprehensive yet concise description of the Offeror's capabilities to satisfy the requirements of the RFP. Emphasis should be placed on completeness and clarity of content.

2.10 OFFEROR CERTIFICATIONS The Offeror shall certify (a) that its proposal is genuine and is not made in the interest of, or on behalf of, any undisclosed person, firm, or corporation, and is not submitted in conformity with, and agreement of, any undisclosed group, association, organization, or corporation; (b) that it has not directly or indirectly induced or solicited any other Offeror to put in a false proposal; (c) that it has not solicited or induced any other person, firm, or corporation to refrain from submitting a proposal; and (d) that it has not sought by collusion to obtain for itself any advantage over any other Offeror or over the Grantee or USTDA or any employee thereof.

2.11 CONDITIONS REQUIRED FOR PARTICIPATION Only U.S. firms are eligible to participate in this tender. However, U.S. firms may utilize subcontractors from the Host Country for up to 20 percent of the amount of the USTDA grant for specific services from the TOR identified in the subcontract. USTDA’s nationality requirements, including definitions, are detailed in Annex 3.

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2.12 LANGUAGE OF PROPOSAL All proposal documents shall be prepared and submitted in English, and only English.

2.13 PROPOSAL SUBMISSION REQUIREMENTS The Cover Letter in the proposal must be addressed to: Luz M. Méndez Contracting Officer Purchasing, Warehousing and Inventories Division Panama Canal Authority Building 710 Balboa, Ancón Panama City PANAMA Phone: + (507) 272-1587 An original printed copy, three (3) hard copies, and an electronic copy (PDF file preferred) of your proposal must be received at the above address no later than 2:00 PM (local time in Panama City, Panama), on February 16, 2016. Proposals may be either sent by overnight courier or hand-delivered. Whether the proposal is sent by courier or hand-delivered, the Offeror shall be responsible for actual delivery of the proposal to the above address before the deadline. Any proposal received after the deadline will be returned unopened. The Grantee will promptly notify any Offeror if its proposal was received late. Upon timely receipt, all proposals become the property of the Grantee.

2.14 PACKAGING The original and each copy of the proposal must be sealed to ensure confidentiality of the information. The proposals should be individually wrapped and sealed, and labeled for content including the name of the project and designation of "original" or "copy number x." The original printed copy, three (3) hard copies, and the electronic copy should be collectively wrapped and sealed, and clearly labeled, including the contact name and the name of the project. Neither USTDA nor the Grantee will be responsible for premature opening of proposals not properly wrapped, sealed, and labeled.

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2.15 OFFEROR’S AUTHORIZED NEGOTIATOR

The Offeror must provide the name, title, address, telephone number, e-mail address, and fax number of the Offeror’s authorized negotiator. The person cited shall be empowered to make binding commitments for the Offeror and its subcontractors, if any.

2.16 AUTHORIZED SIGNATURE The proposal must contain the signature of a duly authorized officer or agent of the Offeror empowered with the right to bind the Offeror.

2.17 EFFECTIVE PERIOD OF PROPOSAL The proposal shall be binding upon the Offeror for ninety (90) days after the proposal submission deadline, and Offeror may withdraw or modify this proposal at any time prior to the submission deadline upon written request, signed in the same manner and by the same person who signed the original proposal.

2.18 EXCEPTIONS All Offerors agree by their response to this RFP announcement to abide by the procedures set forth herein. No exceptions shall be permitted.

2.19 OFFEROR QUALIFICATIONS As provided in Section 3, Offerors shall submit evidence that they have relevant past experience and have previously delivered advisory, feasibility study, technical assistance, and/or other services similar to those required in the TOR, as applicable.

2.20 RIGHT TO REJECT PROPOSALS The Grantee reserves the right to reject any and all proposals.

2.21 PRIME CONTRACTOR RESPONSIBILITY Offerors have the option of subcontracting parts of the services they propose. The Offeror's proposal must include a description of any anticipated subcontracting arrangements, including the name, address, and qualifications of any subcontractors. USTDA nationality provisions apply to the use of subcontractors and are set forth in detail in Annex 3. The successful Offeror shall cause appropriate provisions of its contract, including all of the applicable USTDA Mandatory Contract Clauses, to be inserted in any subcontract funded or partially funded by USTDA grant funds.

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2.22 AWARD The Grantee shall make an award resulting from this RFP to the best qualified Offeror, on the basis of the evaluation factors set forth herein. The Grantee reserves the right to reject any and all proposals received.

2.23 COMPLETE SERVICES The successful Offeror shall be required to (a) provide local transportation, office space and secretarial support required to perform the TOR if such support is not provided by the Grantee; (b) provide and perform all necessary labor, supervision, and services; and (c) in accordance with best technical and business practice, and in accordance with the requirements, stipulations, provisions, and conditions of this RFP and the resultant contract, execute, and complete the TOR to the satisfaction of the Grantee and USTDA.

2.24 INVOICING AND PAYMENT Deliverables under the contract shall be delivered on a schedule to be agreed upon in a contract with the Grantee. The Contractor may submit invoices to the designated Grantee Project Director in accordance with a schedule to be negotiated and included in the contract. After the Grantee’s approval of each invoice, the Grantee will forward the invoice to USTDA. If all of the requirements of USTDA’s Mandatory Contract Clauses are met, USTDA shall make its respective disbursement of the grant funds directly to the U.S. firm in the United States. All payments by USTDA under the Grant Agreement will be made in U.S. currency. Detailed provisions with respect to invoicing and disbursement of grant funds are set forth in the USTDA Mandatory Contract Clauses attached in Annex 4.

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Section 3: PROPOSAL FORMAT AND CONTENT To expedite proposal review and evaluation, and to assure that each proposal receives the same orderly review, all proposals must follow the format described in this section. Proposal sections and pages shall be appropriately numbered and the proposal shall include a Table of Contents. Offerors are encouraged to submit concise and clear responses to the RFP. Proposals shall contain all elements of information requested without exception. Instructions regarding the required scope and content are given in this section. The Grantee reserves the right to include any part of the selected proposal in the final contract. The proposal shall consist of a technical proposal only. A cost proposal is NOT required because the amount for the contract has been established by a USTDA grant of US$878,800, which is a fixed amount. Offerors shall submit one (1) original printed copy, three (3) hard copies, and one (1) electronic copy of the proposal. Proposals received by fax cannot be accepted. Each proposal must include the following:

Transmittal Letter, Cover/Title Page, Table of Contents, Executive Summary, Firm Background Information, Completed U.S. Firm Information Form, Organizational Structure, Management Plan, and Key Personnel, Technical Approach and Work Plan, and Experience and Qualifications.

Detailed requirements and directions for the preparation of the proposal are presented below.

3.1 EXECUTIVE SUMMARY An Executive Summary should be prepared describing the major elements of the proposal, including any conclusions, assumptions, and general recommendations the Offeror desires to make. Offerors are requested to make every effort to limit the length of the Executive Summary to no more than five (5) pages.

3.2 U.S. FIRM INFORMATION A U.S. Firm Information Form in .pdf fillable format is attached at the end of this RFP in Annex 6. The Offeror must complete the U.S. Firm Information Form and include the completed U.S. Firm Information Form with its proposal.

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3.3 ORGANIZATIONAL STRUCTURE, MANAGEMENT, AND KEY PERSONNEL Describe the Offeror's proposed project organizational structure. Discuss how the project will be managed, including the principal and key staff assignments for this Feasibility Study. Identify the Project Manager who will be the individual responsible for this project. The Project Manager shall have the responsibility and authority to act on behalf of the Offeror in all matters related to the Feasibility Study. Provide a listing of personnel (including subcontractors) to be engaged in the project, including both U.S. and local subcontractors, with the following information for key staff: position in the project; pertinent experience, curriculum vitae; and other relevant information. If subcontractors are to be used, the Offeror shall describe the organizational relationship, if any, between the Offeror and the subcontractor. A manpower schedule and the level of effort for the project period, by activities and tasks, as detailed under the Technical Approach and Work Plan shall be submitted. A statement confirming the availability of the proposed Project Manager and key staff over the duration of the project must be included in the proposal.

3.4 TECHNICAL APPROACH AND WORK PLAN Describe in detail the proposed Technical Approach and Work Plan (the “Work Plan”). Discuss the Offeror’s methodology for completing the project requirements. Include a brief narrative of the Offeror’s methodology for completing the tasks within each activity series. Begin with the information gathering phase and continue through delivery and approval of all required reports. Prepare a detailed schedule of performance that describes all activities and tasks within the Work Plan, including periodic reporting or review points, incremental delivery dates, and other project milestones. Based on the Work Plan, and previous project experience, describe any support that the Offeror will require from the Grantee. Detail the amount of staff time required by the Grantee or other participating agencies and any work space or facilities needed to complete the Feasibility Study.

3.5 EXPERIENCE AND QUALIFICATIONS Provide a discussion of the Offeror's experience and qualifications that are relevant to the objectives and TOR for the Feasibility Study. If a subcontractor(s) is being used, similar information must be provided for the prime and each subcontractor firm proposed for the project. The Offeror shall provide information with respect to relevant experience and qualifications of key staff proposed. The Offeror shall include letters of commitment from the individuals proposed confirming their availability for contract performance.

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As many as possible but not more than six (6) relevant and verifiable project references must be provided for each of the Offeror and any subcontractor, including the following information:

Project name, Name and address of client (indicate if joint venture), Client contact person (name / position / current phone and fax numbers), Period of Contract, Description of services provided, Dollar amount of Contract, and Status and comments.

Offerors are strongly encouraged to include in their experience summary primarily those projects that are similar to the Feasibility Study as described in this RFP.

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Section 4: AWARD CRITERIA Individual proposals will be initially evaluated by a Procurement Selection Committee of representatives from the Grantee. The Committee will then conduct a final evaluation and completion of ranking of qualified Offerors. The Grantee will notify USTDA of the best qualified Offeror, and upon receipt of USTDA’s no-objection letter, the Grantee shall promptly notify all Offerors of the award and negotiate a contract with the best qualified Offeror. If a satisfactory contract cannot be negotiated with the best qualified Offeror, negotiations will be formally terminated. Negotiations may then be undertaken with the second most qualified Offeror and so forth. The selection of the Contractor will be based on the following criteria: Minimum experience and qualifications:

The Offeror shall have at least ten (10) years of experience in the areas of Technical Experience and Financial Experience, as described below.

The proposed Project Manager shall have at least ten (10) years of experience leading teams developing similar projects. In addition, the Project Manager shall have at least a bachelor’s degree in an engineering field.

Each individual of the proposed key personnel shall have at least ten (10) years of experience in the corresponding field of expertise.

1. Technical Experience (50 points):

Offeror’s experience in all areas of LNG terminal development, LNG system applications, LNG terminal infrastructure, LNG operational systems (including LNG power generation), and LNG facilities and maintenance systems (including experience in the design, installation, operation, and maintenance of LNG terminals and LNG power generating systems and equipment). Offeror’s knowledge and understanding of all concepts and practices in developing recommendations for the implementation of LNG terminal and LNG power generation systems (including IT operations and technology applications), experience in the development of system-wide LNG integration, development of LNG master plans, and development of LNG equipment and system specifications.

Offeror’s experience and prior involvement in studying, defining, and recommending LNG terminal and LNG power generating plans, including all necessary LNG terminal systems and equipment. Offeror’s knowledge in the use of LNG terminal and LNG power generating systems technical standards, regulations, and specifications.

2. Work Plan and Project Methodology (20 points):

Adequacy, soundness, and thoroughness of the Offeror’s proposed Technical Approach and Work Plan.

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3. Financial Experience (20 points): Offeror’s experience in conducting economical and financial analysis for the

implementation of LNG terminals and LNG power generating infrastructure, along with related equipment and systems. Offeror’s experience in the development of capital investment programs for LNG infrastructure and technologies.

Offeror’s experience and prior involvement in identifying eligible financial resources for the acquisition and deployment of LNG-related technologies (for example, with financing from multilateral development banks, other financial institutions, or other financing sources). Offeror’s expertise in conducting market demand analysis for LNG terminals and LNG power generating facilities.

Offeror’s experience in developing plans for promoting private sector participation in LNG terminals and related services. Offeror’s expertise in the analysis of the various LNG terminal financing and operating models.

Offeror’s experience in developing and implementing the necessary legal, regulatory, and institutional framework under which LNG infrastructure and related technologies are financed and operated.

4. International and Regional Experience (10 points): Offeror’s relevant experience at the

international level, preferably relevant experience in Latin America. Proposals that do not include all requested information may be considered non-responsive. Price will not be a factor in Contractor selection.

A N N E X 1

FEDBIZOPPS ANNOUNCEMENT

Luz M. Méndez Contracting Officer Purchasing, Warehousing and Inventories Division Panama Canal Authority Building 710, Balboa, Ancón Panama City, Panama Phone: + (507) 272-1587 Solicitation Number: 2015-51013A B – Panama: Panama Canal LNG Terminal Project Feasibility Study POC: Jennifer Van Renterghem, USTDA, 1000 Wilson Boulevard, Suite 1600, Arlington, VA 22209-3901, Tel: (703) 875-4357, Fax: (703) 875-4009, Email: [email protected]. The Grantee (the Panama Canal Authority) invites submission of qualifications and proposal data (collectively referred to as the "Proposal") from interested U.S. firms that are qualified on the basis of experience and capability to develop a Feasibility Study to assess and plan the development of LNG-related projects in Panama. The Grantee is interested in developing LNG-related infrastructure to capitalize on the projected increase in LNG tanker traffic resulting from the expansion of the Panama Canal. The goal of the Feasibility Study is to develop a strategic development plan for LNG infrastructure and natural gas utilization at the Panama Canal, with specific recommendations to: (i) develop a comprehensive strategy for the development of LNG facilities on canal property; (ii) define effective policies, standards, and procedures to guide and support the Grantee’s LNG development program; (iii) evaluate new services and applications derived from the increased availability of natural gas supplies in Panama; and (iv) provide an implementation plan, including project schedules, budgets, and equipment recommendations. The U.S. firm selected will be paid in U.S. dollars from an $878,800 grant to the Grantee from the U.S. Trade and Development Agency ("USTDA"). A detailed Request for Proposals ("RFP"), which includes requirements for the Proposal, the Terms of Reference, and portions of a background Definitional Mission report are available from USTDA, at 1000 Wilson Boulevard, Suite 1600, Arlington, VA 22209-3901. To request the RFP in PDF format, please go to: http://www.ustda.gov/business-opportunities/request-proposal-form Requests for a mailed hardcopy version of the RFP may also be faxed to the IRC, USTDA at 703-875-4009. In the fax, please include your firm’s name, contact person, address, and telephone number. Some firms have found that RFP materials sent by U.S. mail do not reach them in time for preparation of an adequate response. Firms that want USTDA to use an overnight delivery service should include the name of the delivery

service and your firm's account number in the request for the RFP. Firms that want to send a courier to USTDA to retrieve the RFP should allow one hour after faxing the request to USTDA before scheduling a pick-up. Please note that no telephone requests for the RFP will be honored. Please check your internal fax verification receipt. Because of the large number of RFP requests, USTDA cannot respond to requests for fax verification. Requests for RFPs received before 4:00 PM will be mailed the same day. Requests received after 4:00 PM will be mailed the following day. Please check with your courier and/or mail room before calling USTDA. Only U.S. firms and individuals may bid on this USTDA-financed activity. Interested firms, their subcontractors and employees of all participants must qualify under USTDA's nationality requirements as of the due date for submission of qualifications and proposals and, if selected to carry out the USTDA-financed activity, must continue to meet such requirements throughout the duration of the USTDA-financed activity. All goods and services to be provided by the selected firm shall have their nationality, source, and origin in the U.S. or host country. The U.S. firm may use subcontractors from the host country for up to 20 percent of the USTDA grant amount. Details of USTDA's nationality requirements and mandatory contract clauses are also included in the RFP. Interested U.S. firms should submit their Proposal in English directly to the Grantee by 2:00 PM (local time in Panama City, Panama) on February 16, 2016 at the above address. Evaluation criteria for the Proposal are included in the RFP. Price will not be a factor in contractor selection, and therefore, cost proposals should NOT be submitted. The Grantee reserves the right to reject any and/or all Proposals. The Grantee also reserves the right to contract with the selected firm for subsequent work related to the project. The Grantee is not bound to pay for any costs associated with the preparation and submission of Proposals.

A N N E X 2

PORTIONS OF BACKGROUND DEFINITIONAL MISSION REPORT

Mailing and Delivery Address: 1000 Wilson Boulevard, Suite 1600, Arlington, VA 22209-3901

Phone: 703–875–4357 • Fax: 703–875–4009 • Web site: www.ustda.gov

C O N F I D E N T I A L REPORT

Panama – Maritime Transportation Sector Projects Definitional Mission

by

HEP Transportation Consulting

February 2015

This report was funded by the U.S. Trade and Development Agency (USTDA),

an agency of the U.S. Government. The opinions, findings, conclusions, or

recommendations expressed in this document are those of the author(s) and do not necessarily

represent the official position or policies of USTDA. USTDA makes no representation about, nor

does it accept responsibility for, the accuracy or completeness of the information contained in this

report.

Mailing and Delivery Address: 1000 Wilson Boulevard, Suite 1600, Arlington, VA 22209-3901

Phone: 703–875–4357 • Fax: 703–875–4009 • Web site: www.ustda.gov

The U.S. Trade and Development Agency

The U.S. Trade and Development Agency helps

companies create U.S. jobs through the export of U.S.

goods and services for priority development projects in

emerging economies. USTDA links U.S. businesses to

export opportunities by funding project planning

activities, pilot projects, and reverse trade missions while

creating sustainable infrastructure and economic growth

in partner countries.


HEP Transportation Consulting Page | 4

B. GENERAL BACKGROUND AND PROJECT EVALUATIONS

1.0 Panama Overview Panama has been one of the fastest-growing emerging economies in Latin America over the last five years, expanding by an average of over 9% per year. Following a brief slowdown in 2009 in the wake of the international financial crisis, medium-term growth prospects (2010-2014) are highly positive for Panama, ranking the country as one of the Latin American economies with the greatest growth potential over the next five years. Economic activity is concentrated around Panama City and the Panama Canal Area, where most of the country’s infrastructure and services are located, more than half of the population lives, and over 80% of the Growth Domestic Product (GDP) is produced. The financial, commercial, and logistics sectors organized around the Panama Canal have developed strongly over the last decade, fueled mainly by the expansion of world trade in that period. This dynamic has shifted the orientation of the Panamanian economy increasingly towards the services sector, which, at 78%, currently has the largest GDP share of any services sector in Latin America. Alongside this, over the last decade, the Panamanian government pursued a policy aimed at strengthening public finances, reducing debt levels, maintaining macro-economic stability, and promoting investment in infrastructure, (particularly the Canal expansion), and the financial and commercial sectors. This strategy has succeeded in attracting substantial amounts of foreign capital and has strengthened Panama’s economy and growth. Against this backdrop, the Panamanian government presented a Government Strategic Plan (Plan Estratégico de Gobierno-PEG) to the National Assembly in December 2009, which was structured around three major strategy areas: 1) an economy with sustained growth; 2) an inclusive society with opportunities for all; and 3) efficient and effective environmental management. Within the PEG framework, the GoP defined a five-year investment plan, totaling US$13.6 billion, to develop infrastructure, improve social services, and reduce poverty.

2.0 Panama’s Maritime Sector Overview Panama has experienced strong GDP growth rates, despite the recent global financial crisis. The Panamanian economy has seen unprecedented growth in recent years and forecasts indicate that as the global financial economies recover, Panama expects to experience even higher growth rates. The maritime transportation sector plays a vital role in Panama’s economy, given the crucial function of connecting the country with the rest of the world. The Panamanian maritime industry represents 20% of Panama’s GDP and is the fastest growing sector in the national economy. Panama has one of the most stable and sound economies in Latin America and the GoP continues to make investments to exploit the country’s strategic location as a strong global and regional trade center with the purpose to continue strengthening Panama’s position and integration into the global economy. The Panama Canal represents one of the most important waterways in the world allowing millions of tons of cargo to transit between the Atlantic and Pacific oceans, including 144 routes in world trade. The Panama Canal has served as Panama’s mainstay maritime facility for trade and economic development and Panama has entered into free trade agreements with various partners (including the U.S.-Panama FTA) in order to expand its global market participation.



The Autoridad del Canal de Panamá (ACP) is responsible for overseeing the development and operation of the Panama Canal. Over the years the ACP has played a key role in bringing the Panama Canal up to internationally competitive standards and has undertaken numerous infrastructure projects to improve the Canal’s operational capacity and safety. The ACP is currently undertaking a $5.25 billion Canal expansion that includes the widening and deepening the access channel in the Atlantic and Pacific oceans, improvements to the Gaillard Cut, and the construction of new sets of locks to allow for the passage of Post-Panamax ships through the Canal. The Panama Canal has continued to experience significant growth in traffic and with the completion of the Canal expansion, additional vessel traffic is forecasted. The ACP has positioned itself as one of the key players in Panama’s impressive commercial and economic expansion program which has led to sustained maritime activity growth and economic development in Panama. The Panama Maritime Authority (Autoridad Marítima de Panamá, “AMP”) is an autonomous government entity responsible for overseeing and regulating maritime activities in the country, promoting domestic and foreign investments, promoting the development of multi-modal logistic centers through the operation of the Panama-Colon railroad, and supporting the development of maritime port infrastructure in Panama. Panama’s Maritime Authority oversees a number of maritime activities such as regulation and safety, security oversight, and the promotion of maritime improvements within capital budgets for port and terminal developments. While the AMP oversees maritime development, the ACP is solely dedicated to the development and operation of the Panama Canal. The Panama Canal and Panama’s ports are the cornerstones of infrastructure development in the country and the GoP continues to support the country’s transportation sector with the goal to develop a robust, dependable, integrated, and multimodal transportation system that will strengthen Panama’s position as a regional commercial and trade hub. Maritime ports are crucial to the commercial activity and economic expansion of Panama. The AMP understands that its port infrastructure and logistic operations are fundamental components for boosting Panama’s commercial activity and economic growth, and as such, the AMP have embarked on a program to construct and rehabilitate its port operations and infrastructure through Public-Private Partnerships (PPPs). Panama’s port system is made up of 18 ports, of which 11 are managed by the AMP, and the remaining 7 ports are managed and operated by the private sector. The most important ports are operated by the private sector which include the Colon Container Terminal, Manzanillo International Terminal, and the Balboa and Cristobal ports. A key player in supplementing maritime transportation and intermodal operations in Panama is the Panama Canal Railway Company (PCRC). PCRC provides trans-shipment services of containers from the ocean port terminals of the Pacific and the Atlantic. The PCRC railway system, restored by the Kansas City Southern Railways, has a capacity of 10 trains in each direction every day. PCRC seeks to increase the system’s capacity to 32 trains per direction per day. Additionally, Panama has taken important steps to improve and promote investment in the maritime sector by the privatization of port and maritime facilities allowing the private sector to invest in maritime infrastructure. Panama currently has important maritime projects underway or in the planning stages, aimed at continuing to expand and modernize the maritime sector in the country and to provide the required maritime infrastructure and technologies for increased



capacity. Maritime projects in Panama include the expansion of the Panama Canal, the consideration for port projects in the Pacific side of the Canal, and the development of logistic centers to further support the national economy and to make Panama a logistic hub for the Americas. Other key players supporting the development of the maritime sector in Panama are the World Bank, The Inter-American Development Bank, The Latin American Development Bank (CAF), The International Finance Corporation, and the European Investment Bank as these agencies are providing financing for the Canal expansion project and other logistic related projects in Panama. The ACP understands that upon the completion of the Canal expansion there will be substantial traffic growth through the waterway which represents additional needs for maritime services in Panama. In order to capitalize on the traffic growth of the Canal, the ACP wishes to diversify the Canal services with additional commercial activities that would be concentrated in six strategic areas to include the development of container, intermodal, and Ro-Ro terminals, the construction and operation of LNG terminals, bunkering activities, container on barge services, top-off operations, and ship repair and maintenance facilities and to develop new business lines that can support the Canal’s core function as a vital maritime transportation corridor. The ACP has officially requested assistance from USTDA for the development of various feasibility studies covering the six strategic business areas identified by the ACP as priority development projects. As such, USTDA is interested in assisting the ACP in further developing new commercial activities for the Panama Canal with the development of feasibility studies that could help to foster U.S. export opportunities while supporting the ACP’s priority projects that advance sustainable infrastructure and economic growth in Panama.

3.0 Panama Canal Expansion Project In 2006 the citizens of Panama voted by referendum to approve the GoP through the ACP to embark on a $5.25 billion Canal expansion. The objectives of the Canal expansion are to:

Achieve long-term sustainability and growth for the Canal’s contributions to the Panamanian society through the payments it makes to the national treasury;

Maintain the Canal’s competitiveness as well as the value added by Panama’s maritime

route to the national economy;

Increase the Canal’s capacity to capture the growing tonnage demand with the appropriate levels of service for each market segment and;

Make the Canal more productive, safe, and efficient.

The Panama Canal expansion program has four principal components that include the building of a third set of floodgates, including two floodgates complexes and recycle tubs on both ends of the Canal. Dredging the access channels in the Atlantic and the Pacific oceans and the expansion and deepening of the existing navigation channels. Additionally, the expansion project includes an increase to the maximum functioning level of the Gatun Lake that provides fresh water to the Canal. The current floodgates can accommodate container ships with a maximum capacity of 4,500 TEU (twenty foot equivalent unit). The new floodgates, as big as



four football fields, could be used for ships of up to 12,600 TEU. The new floodgates will use less water, since most of the water will be recycled in the adjacent tubs. During the construction phase, the expansion program is expected to create up to 7,000 direct jobs and 3,000 indirect ones. Once the construction is concluded, the Canal will generate more income for Panama and will maintain its status as a secure, efficient and trustworthy waterway for international maritime trade.

4.0 Diversification of Canal Services According to ACP officials, it is ideal for the ACP to take advantage of the opportunity presented by the projected growth in maritime traffic through the Panama Canal to consider the diversification of maritime services in Panama with the purpose to further support the overall operation and sustainability of Canal operations. Two new sets of locks are being constructed to handle post-Panamax vessels which will include more tonnage while using less water resources at lower costs which represents a substantial amount of transits through the Canal in future years. Since the Canal is the country’s main economic engine, the ACP considers the Canal expansion as a fundamental step towards developing Panama’s service cluster, which takes advantage of the Isthmus’s geographical position and has turned Panama into a world trade, transportation and logistics center. Additionally, the expansion of this capacity ensures the integrated and sustained growth of all maritime activities to be developed in Panama, which is consistent with the national maritime strategy. The completion of the Canal expansion will drive the national economy and improve the quality of life for all Panamanians. The ACP’s objectives for the diversification of business services include revenue enhancement and cost management of Canal operations, upgrade of infrastructure and facilities, enhancement of safety and security, employee productivity and retention, environmental sustainability, and improved customer service and corporate image. The introduction of new business lines and services by the ACP is envisioned to experience growth after the completion of the Canal expansion which could lead to the vibrant growth of the maritime industry. The GoP has seen its demand for maritime services increased significantly since 2006 when the Canal expansion was authorized and funded. The rapid expansion in maritime service demand in Panama is beginning to compete for market share provided by other major maritime service providers in Panama and more international companies are establishing businesses in Panama in anticipation of the completion of the Canal expansion. The ACP completed the development of a Canal Master Plan identifying the ACP’s investment requirements and various alternatives for infrastructure building in the maritime sector in Panama. The Canal Master Plan reviewed a number of Canal facilities throughout the Panama Canal Authority areas and made recommendations as to the improvements that are needed for short, medium, and long-term periods including identifying the required capital investments. HEP conducted an evaluation of the maritime transportation sector projects associated with the Panama Canal in order to identify viable project activities for USTDA. The following section identifies the maritime transportation activities reviewed as part of the DM.



3.12 Estimated Capital Cost for Project Implementation This section of the report presents the estimated capital cost for the proposed LNG terminal project for the Panama Canal as well as the LNG power generation project and the modernization of the Panama Canal Marine Traffic Control System. 3.12.1 LNG Terminal Capital Costs The construction cost of LNG terminals varies considerably, depending on the local construction cost, the cost of the land, the type of receiving terminal (off-shore, on-shore, port, jetty, others), the re-gasification technology, and most importantly, the capacity and the total amount of storage required by the LNG terminal. The storage capacity can vary from 35,000 to over 2,000,000 cubic meters which is a wide range that would have to be carefully evaluated during the LNG terminal feasibility study. The LNG terminal developer/owner typically selects the capacity and storage requirements for the LNG terminal based on market demand studies. A conventional on-shore terminal with 200,000 to 300,000 cubic meters of storage is typically in the range of U.S.$500 to 700 million. In addition, a major factor in determining the cost of the LNG terminal depends in the re-gasification technologies utilized where for example most Far East LNG terminals utilize the “open-rack” vaporizers (ORVs) method, while most U.S. terminals utilize “gas-fired” vaporizers due to U.S. environmental regulations. In addition to the specifics sited above, the impact of developing an LNG import facility at the Panama Canal is highly dependent on a number of unknown factors. These factors include the evolution of the terminal (i.e., expansion or contraction), and externalities such as economic conditions ranging from global to local levels, investment opportunities and decisions, competition for resources, capital, other factors. These variables are not addressed in the DM report and would be evaluated during the conduct of the feasibility study. While the LNG terminal feasibility study is needed to answer many questions that revolve around the potential construction of an LNG terminal at the Panama Canal, for purposes of illustration, HEP has made certain assumptions and developed a capital cost estimate for the proposed LNG terminal. The table below provides an estimation of the capital costs assuming an LNG terminal with a storage capacity of 300,000 cubic meters.

Table 3 Panama Canal LNG Terminal – Capital Cost Estimate

Item Description TOTAL (US$)

1.0 Marine and Facility Infrastructure 1.1 Port/Jetty/Terminal/Ship Docking Infrastructure Construction

(Channel Dredging, piled concrete breakwater, jetty, platforms, trestle, tanker berths, site utilities, tugboat berths, utility and building infrastructure and other marine works.

300,000,000

2.0 LNG Terminal Facility Systems



2.1 LNG Storage Systems 80,000,000 2.2 Unloading Systems 25,000,000 2.3 Regasification Systems including Vaporization and Condenser

Systems and LNG Gas Turbine 40,000,000

2.4 Other LNG Terminal Auxiliary Equipment (Relief valves, Pipes and valves, pumps, compressors, vaporizers, sensors, leak detectors, others

20,000,000

2.5 LNG Terminal Instrumentation Systems (air systems, temperature and pressure control Systems, emergency release and shut-down systems, automatic leak detection systems, others)

20,000,000

3.0 Operational LNG Terminal Systems 3.1 Terminal Security and Fire Prevention Systems 10,000,000 3.2 Firefighting Equipment 10,000,000 3.3 ICT Technologies including communications systems for the terminal,

SCADA, Vessel Traffic Control Systems (VTS), vessel scheduling and slot management systems, LNG operations and control center, other ICT technologies

10,000,000

3.4 Terminal Power Systems and Emergency Power Generator System 15,000,000 4.0 Other Supporting Equipment 4.1 Tugboats and Tugboat Retrofits 35,000,000 5.0 Other LNG Terminal Expenses 5.1 Engineering, Design, Project Management, and Commissioning 55,000,000 5.2 Other Project Components and Contingency 15,000,000 5.3 LNG Terminal System Spare Parts 10,000,000 5.4 Permits, Fees, and Taxes 5,000,000 GRAND TOTAL $ 650,000,000 3.12.2 LNG Power Generation Capital Costs The cost to convert the existing power generating plants from conventional methods to LNG will vary considerably, depending on several factors that include the type and condition of the existing power generating equipment, the existing and desired power capacity, power demand, capital and operating costs, local construction cost, the type of receiving LNG systems, and the required infrastructure improvements. In addition, a major factor in determining the cost of the LNG power generating project will depend on the most appropriate LNG power generation technology to be utilized by the ACP. All of these factors mentioned above will be considered as part of the proposed LNG feasibility study. HEP worked very closely with GE sales and engineering staff in evaluating the potential requirements for the LNG power generation project for the ACP. GE representatives reported that GE has the most efficient gas turbine system in the world and that the type of LNG power generation applications expected to be required for the ACP could use the LMS 100-PA Aero derivative Gas Turbine Package for each 100 Megawatts of capacity requirement.



While the feasibility study is needed to answer many questions that revolve around the potential conversion of the ACP’s power generating plants to LNG usage, HEP has made certain assumptions and developed a capital cost estimate for the proposed LNG power generating project. The assumptions include the replacement of all ACP power plants to LNG power generation. Currently the ACP operates 10 power plants with a capacity of about 230 MW. The ACP intends to reach an LNG power generation of at least 300 MW with the modernization of the power plants and increase capacity in the future. As such, for purposes of estimating the capital cost for the project, it is assumed that the existing power plants could be replaced with three 100 MW plants to provide 300 MW capacity. The table below provides an estimation of the capital costs that would be required assuming the conversion of conventional power plants to LNG fuel source for power generation.

Table 4 Panama Canal Power Generating Project – Capital Cost Estimate

Item Description Total (U.S. $)

1.0 Power Plant Facility Infrastructure

1.1 Power Plant Infrastructure Modifications/ Construction/Expansion (utility and building infrastructure, LNG storage site, LNG connections, pipelines, other)

30,000,000

2.0 LNG Power Plant/Facility Systems

2.1 LNG Storage and Transfer Systems 25,000,000

2.2 LNG Gas Turbines 50,000,000

2.3 Generators and Transformers 15,000,000

2.4 Other LNG Power Plant Auxiliary Equipment (Relief valves, pipes and valves, pumps, sensors, leak detectors, cooling systems, water systems, others)

5,000,000

2.5 LNG Power Plant Instrumentation Systems and ICT Technologies for Power Plant Control Center (switch gear and breaker systems)

5,000,000

2.6 Security and Fire Prevention Systems 4,000,000

3.0 Other LNG Power Plant Expenses

3.1 Engineering, Design, Project Management, and Commissioning 14,000,000

3.2 LNG Power Plant Spare Parts and Contingency 5,000,000

3.3 Permits, Fees, and Taxes 2,000,000

GRAND TOTAL $ 155,000,000

3.13 Financial Institutions Multilateral development banks/institutions provide financial support and professional advice for economic and social development activities in developing countries. Multilateral institutions that may be willing to lend to the ACP LNG terminal project include the European Investment Bank (EIB), the World Bank, International Finance Corporation (IFC), the Inter-American Development Bank (IDB), and the Corporación Andina de Fomento (CAF). Also other financial institutions such as OPIC and Ex-Im Bank could support the private sector in the development of LNG terminal technologies.



HEP contacted several financial institutions including IFC, World Bank, OPIC, IDB, Ex-Im Bank, and CAF with the purpose to discuss the potential strategic business projects proposed by the ACP and to determine the participation that could possibly support the ACP in financing project development. The following summarizes the information received from the various financial institutions. International Finance Corporation - (IFC) HEP contacted Mr. Ravi S. Bugga from the IFC’s Infrastructure Office and Ms. Cheryl Edleson Hanway regarding the proposed projects in Panama. Mr. Bugga and Ms. Edleson Hanway indicated that the IFC provided finance to the ACP in the amount of $300 million for the Canal expansion, but no further support has been provided for additional maritime activities in Panama. More specific information regarding the proposed ACP projects would be needed for the IFC to review the merits of the projects. While in Panama, HEP and USTDA representatives met with Ms. Angela Maria Fonseca Arango, Head of IFC Country Office in Panama and presented the proposed ACP projects. The IFC would be interested in learning more about those projects that ACP wishes to embark upon to determine if there may be opportunities for the IFC to support the ACP. World Bank HEP contacted the World Bank’s office in Panama to inquire about the Bank’s participation in the Panama Canal expansion project and discussed the ACP strategic projects. HEP was informed that since the ACP is an autonomous authority, the ACP is considered a private operator and as such, all financial assistance to the ACP would come from the IFC. No further contact was made with World Bank representatives regarding the ACP projects. Overseas Private Investment Corporation - (OPIC) HEP contacted Ms. Nancy Rivera, Vice President of Structured Finance for OPIC to inquire about the proposed projects in Panama. Ms. Rivera indicated that at this time the corporation has not been engaged in supporting private sector businesses in the maritime sector in Panama. However, depending on the outcome of the developments of the ACP projects and the level of participation from private U.S. firms, OPIC may represent another source of financing support for components of the proposed projects in Panama. The Export- Import Bank - (Ex-Im Bank) HEP contacted Ms. Kate Bishop from the Business Development Section of the Ex-IM Bank to inquire about the bank’s participation in the maritime transportation sector in Panama. Ms. Bishop indicated that in recent years (in Panama) the bank has concentrated in the aviation sector, primarily supporting the acquisition of airplanes by Copa Airlines. Furthermore, Ms. Bishop reported that the bank does not support maritime/port projects anymore unless those involve pipelines. Since the LNG project could involve a certain degree of pipeline infrastructure, there may be opportunities for the Ex-Im Bank to consider supporting private sector companies associated with the LNG terminal for Panama.



Inter-American Development Bank (IDB) HEP contacted Mr. Carlos Mojica from the IDB Transport Latin American Division in Washington D.C. as well as Mr. Juan Manuel Leano, Especialista en Transporte at the IDB office in Panama. Mr. Leano indicated that the bank is currently supporting the ACP financially through a loan package in the amount of U.S.$ 400 million directly related to the Panama Canal expansion. The IDB has continued to provide financing to the GoP for the rehabilitation and construction of the country’s roadway system. Any IDB loans for the public sector in Panama must be approved and negotiated through Panama’s Ministerio de Haciendas (Finance Ministry), while loans for the private sector can be issued directly to a private company or autonomous authority such as the ACP. Mr. Leano indicated that the IDB is currently financing the development of a National Logistics Plan for the GoP working through the Ministerio de Industria y Comercio. This initiative seeks to evaluate all logistic opportunities in Panama and to develop a national logistic plan that includes the creation of a logistic ministry, logistic infrastructure plan, logistic investment plan, and other logistic dependent areas. Mr. Leano indicated that the logistic initiative is being developed under five working groups that include the following specific areas:

Infrastructure; Human resources; Administrative and Legal; Logistic Processes and; Logistic Operations.

Mr. Leano indicated that the ACP plays a key role in every working group identified above and that the new maritime services being proposed by the ACP as an extension of standard Canal services have been discussed as part of the logistic initiative groups. The IDB is currently the leading financing entity supporting the logistic sub-sector in Panama and as such, Mr. Leano is very interested in learning more about the potential projects that the ACP is seeking to develop with the potential assistance from USTDA. Mr. Leano pointed out two important elements regarding future assistance from the IDB in Panama. The first one is the subject of the national debt ceiling for the GoP which Mr. Leano indicates has reached a limit for the public sector in Panama, but not so for the private sector. The second issue is political and it deals with the recent elections for a new president in Panama. Mr. Leano indicated that when working with ACP projects, the feasibility studies and technical assistance require expediency in terms of conducting the studies and presenting results to the ACP in a prompt manner. The ACP has a good track record in the development of their infrastructure projects and Canal operation and once the ACP engages on a project, the timelines and project deliveries are very demanding. Given the relationship that already exists between the IDB, the ACP, and the GoP, the bank would be willing to consider other opportunities to support the ACP in the development of new strategic business activities that strengthens the Canal. Corporación Andina de Fomento (CAF) While in Panama, HEP and USTDA representatives met with Susana Pinilla, Director Representative for CAF in Panama and Rafael Farromeque, Especialista Senior from CAF. Mr.



Farromeque indicated that CAF has provided substantial financing assistance to the ACP for the Panama Canal expansion. Additionally, CAF has provided financing to the GoP in other areas such as the development of the metro project, road construction projects, energy projects and other areas. CAF is very active in Panama and could potentially consider supporting the ACP and the GoP on other initiatives that may include additional Canal services. CAF representatives would like to be kept informed of any new developments that are eventually supported by USTDA for the ACP’s new business lines.

3.14 Summary of ACP’s Financial Assessment The financial assessment conducted for the ACP determines that the agency has the financial capability to undertake and fund (under various financing scenarios to be evaluated by the feasibility study) the proposed LNG project. The maritime sector has demonstrated significant growth over the last 5 years in Panama and so has the toll revenues collected by the ACP. The financial assessment results indicate that the ACP’s profits have been significant over the last ten years and maritime traffic through the Canal is expected to continue an upward trend which will represent further revenue increases for the ACP in the future. The ACP has put in place the necessary controls and policies that regulates the authority from an economic perspective. The ACP staff along with special committees regulates the Canal toll pricing structure and prescribes minimum service standards that considers the Canal traffic movements, capital expenditures, safety, capacity, monetary values, and the long-term financial sustainability for the ACP. The ACP seeks to channel public investment into areas that can make a real difference in maximizing revenues and jobs to boost economic growth through the development of new business lines such as LNG operations and services. Based on the financial assessment conducted, HEP determines that the ACP enjoy excellent financial standings and the agency is very capable of continuing to fund maritime transportation infrastructure and the modernization of Canal technologies to support and strengthen the operational and financial position of the Panama Canal. The result from the financial assessment reveals that the ACP operates under self-sustainable and independent corporate-style programs that provide for the sound administration of the authority generating substantial revenues and profits and contributing significantly to the Panamanian economy.

4.0. U.S. Export Potential This section of the report summarizes the findings that resulted from the U.S. export potential assessment conducted as part of the DM. The U.S. export potential was developed from discussions held with the various Panamanian officials, from site inspections conducted at the Panama Canal and other maritime sector facilities, and from the review of documentation as part of the DM research.

4.1 LNG Terminal U.S. Export Potential There are a variety of LNG-type terminals that service different customers and uses which require various technologies and systems for terminal operation and LNG distribution. For example there are LNG import terminals that offer small scale services such as LNG receiving terminals, also called regasification facilities or “regas” facilities that receive LNG ships, store



the LNG until it is required, and send out natural gas into a pipeline grid or other distribution systems. Additionally, they can offer small scale services such as:

loading of bunkering ships; truck loading; or rail loading.

Other types of LNG facilities include LNG (stationary) bunkering facilities for vessels, where these facilities allow ships to bunker LNG to be used as fuel for the vessel. In addition, LNG satellite storage facilities enable the use of natural gas off pipeline locations. LNG is delivered by trucks or by small LNG transport ships to satellite stations. Then the LNG is either distributed by trucks to the end users or it is re-gasified and injected into the natural gas distribution networks. Finally, there are LNG refueling stations for trucks and these type facilities allow trucks to fill LNG to be used as alternative fuel. The feasibility study for the ACP will have to evaluate the most appropriate type of LNG terminal for the Panama Canal based on the needs and market demand. The U.S. export potential assessment was conducted based on the potential acquisition and implementation of a wide range of LNG systems, power generation equipment, ICT systems, and other maritime transportation technologies for the ACP in Panama. Based on the results from the U.S. export potential assessment, HEP determines that there are opportunities for U.S. firms to market maritime technologies and make investments associated with the supply of a wide array of technologies including LNG, power generation, ICT, and tugboat technologies for the ACP, in addition to a variety of consulting services including feasibility studies, economic analysis, environmental studies, engineering, design, project management, training, and project commissioning. The construction of LNG terminals requires a significant amount of specialized equipment both at the vessel and the terminal/port facility. The major components of the LNG terminal that are identified as potential U.S. exports are presented in the table below.

Table 5 Panama Canal LNG Terminal Project – U.S. Export Potential

System/Component Total Cost/$ U.S.

1.0 LNG Technologies 1.2 On-Shore LNG Storage Tanks 60,000,000 1.3 Unloading Arm Systems 20,000,000 1.4 Emergency Release Systems 3,000,000 1.5 Emergency Shut-down Systems 2,000,000 1.6 LNG Filling Equipment 10,000,000 1.7 LNG Return Gas Blower 10,000,000 1.8 LNG Relief Valve Systems 5,000,000 1.9 LNG Pipes and Valves 10,000,000 1.10 LNG Pumps 10,000,000 1.11 Heaters (Boil-off gas heater, fuel gas heaters, others) 10,000,000 1.12 LNG Gas Turbine 16,000,000 1.13 LNG Vaporizer Systems, Re-gasification, Condenser equipment 10,000,000 1.14 LNG terminal instrumentation 3,000,000 1.15 Firefighting Equipment and Fire Prevention Systems 10,000,000 1.16 LNG Gas Leak Detector Systems 5,000,000



1.17 Terminal Instrument Air Systems and Temperature Control Systems 3,000,000 1.18 Emergency Power Generator Systems 5,000,000 1.18 LNG Terminal Security Systems 3,000,000 1.19 Vessel Tracking and Control Systems (ship scheduling, slot allocation, terminal planning

systems, others) 2,000,000

1.20 ICT Systems including Supervisory Control and Data Acquisition (SCADA) 2,000,000 2.0 Other Related Equipment 2.1 Tugboats and LNG Tugboats Retrofits 21,000,000 3.0 Professional Services 3.1 Engineering, Design, Project Management, and Commissioning 25,000,000 GRAND TOTAL $245,000,000 U.S. firms can also supply a range of specialty materials including chemicals used in construction and facility operations, insulation materials, protective coatings, cathodic protection, and corrosion monitoring and control systems, marine berthing facilities, gas transmission (Send-Out) Pipeline. Other major components of the pipeline system include compressor stations, isolation valves, launchers and receivers for internal cleaning and inspection tools, pipeline markers, cathodic protection equipment, corrosion monitoring equipment, various piping and gauges, and supervisory control and data acquisition (SCADA) systems. All of these items are typically manufactured in the U.S. and can be readily furnished. In addition to the materials and equipment used in a pipeline systems, U.S. manufacturers can provide an assortment of construction equipment associated with the proposed LNG terminal and these companies include Caterpillar, Lincoln Electric, and Laney Directional Drilling.

4.2 Panama Canal Tugboats There may be additional U.S. export opportunities in the supply of marine engines for tugboats and/or LNG engine retrofit for tugboats in the Canal. The Panama Canal owns a large fleet of tugboats that provide tugboat service to all vessels that transit the Panama Canal. The ACP has continued to replace and modernize its tugboat fleet over the years. It is expected that if an LNG terminal is constructed near the Panama Canal, additional tugboats dedicated to support the entry of LNG tankers to the LNG terminal would be required by the ACP. One of the major players in exporting equipment to the Panama Canal has been GE Marine, a Division of GE Transportation. GE Marine’s Distributor in Panama is a U.S. company named Marinsa (located in Miami, Florida). In 2008 the ACP ordered 26 GE Model 12V228 engines from Marinsa to power 13 tugboats that operate in the Panama Canal. Additionally, in 2010 the ACP ordered four GE Model 12V228 engines for tugboats that were being built to operate in the Canal for replacement of older vessels. This brought the number of GE Marine engines operating in the Panama Canal vessel fleet to fifty eight representing millions of dollars of U.S. exports by GE. In June of 2013, the ACP commissioned the construction of fourteen new tugboats and acquired 28 new GE Marine engines. The ACP is currently involved in the replacement of its tugboat fleet as well as increasing the Canal’s tugboat fleet by 20 percent in anticipation of the increased transit of larger vessels that are expected to use the Canal after the completion of the Canal expansion. The new Canal expansion will allow for Post-Panamax vessels up to 1,200 feet in length and capacity of 12,000, twenty-foot containers to transit the Canal. These larger vessels will require specialized tugboats to facilitate transit through the Canal.



One of the most important factors in making the decision to select GE Marine engines was the main engine life-cycle costs over a period of 20 years. It is estimated that if additional services are to be provided by the ACP, such as new port/terminal facilities and LNG terminals, that additional tugboats will be needed to meet future demand for vessel transit, anchoring, and other maneuvers. As such, additional U.S. exports may be realized from GE Marine if additional tugboats are ordered by the ACP in the future.

4.3 LNG U.S. Equipment Suppliers This section provides a representative listing of U.S. firms that may be in a position to compete for the supply of equipment and technologies associated with the LNG terminal project in Panama.

Table 6 List of LNG U.S. Equipment Suppliers

System / Component Type of Unit Manufacturer/ Supplier Contact Information

LNG STORAGE & UNLOADING

LNG Storage Tank Full Containment / Reinforced Concrete Roof

CB&I One CB&I Plaza, 2103 Research Forest Drive The Woodlands, TX. 77308, USA http://www.cbi.com Tel: 1-832-513-1000

United Industries Group, Inc.

P.O. Box 8009 Newport Beach, CA 92658-8009, USA http://www.unitedind.com Tel: 1-949-759-3200

Unloading Arms LNG Marine Loading Arms

Hemco Industries, Inc. 2408 Karbach St. Houston, TX 77092-8006, USA http://www.hemcoind.com/ Tel: 1-877-834-9352

FMC Technologies 1803 Gears Road Houston, TX 77067, USA http://www.fmctechnologies.com Tel: 1-281-591-4000; [email protected]

LNG PUMPS

Internal Tank LNG Pumps

Column Mounted Centrifugal Submerged Pumps

Ebara Fluid Handling 1651 Cedar Lane Rock Hill, SC 29730, USA http://www.pumpsebara.com Tel: 1-803-327-5005; [email protected]

Recirculation Pumps Pot Mounted Centrifugal Submerged Pumps

Nikkiso Cryo, Inc 4661 Eaker Street Las Vegas, NV 89081, USA http://nikkisocryo.com Tel:1-702-643-4900 Ext 102; [email protected]

Sendout Pump Sealess Multi-Stage Magnetic Drive Centrifugal Pump

Klaus Union Inc. 15410 Lillja Rd. P.O. Box 672186 Houston, TX 77060, USA http://www.klausunion.com Tel: 1-281-999-1182; Fax: 281-999-1185

HEATERS

Boil-Off Gas Preheater Shell & Tube Exchanger

Kopetz Mfg., Inc. C/O Chicago Power & Process, Inc

625 W. University Dr. Arlington Heights, IL 60004, USA http://www.kopetzmfg.com Tel: 1-847-870-7900

Fuel Gas Heater

CRYOGENIC BLOWERS COMPRESSORS

Boil Off Gas Blowers Centrifugal n/a Compressor

Barber-Nichols 6325 W. 55th Ave. Arvada, CO 80002, USA http://www.barber-nichols.com Tel: 1- 303- 327- 8656; [email protected]

http://www.hemcoind.com/



Elliott Company 901 N. Fourth Street Jeannette, PA 15644, USA http://www.elliott-turbo.com/ Tel: 1-724-527-2811

Boil Off Gas Compressors

Reciprocating n/a Compressor

Atlas-Copco 14 Rosewood Dr. Hawthorn Woods, IL 60047, USA http://www.atlascopco.us/usus/ Tel: 1-847.726.9866

I.P.S. Services 601 Jefferson, St. 3790 Houston, TX 77002, USA http://www.ips-services.com/index.html Tel: 1-713-651-7876; [email protected]

RECONDENSER

Boil-Off Gas Re-Condenser

Shell & Tube Exchanger

Kopetz Mfg., Inc. C/O Chicago Power & Process, Inc

625 W. University Dr. Arlington Heights, IL, 60004, USA http://www.kopetzmfg.com Tel: 1-847-870-7900

AIR BLOWERS & COMPRESSORS

Centrifugal Compressor

Sundyne Corp. 14845 W. 64th Ave. Arvada, CO 80007, USA http://www.sundyne.com/ind/cda/home/0,10... Tel: 1-303-425-0800

VAPORIZERS

Submerged Combustion Vaporizer

Submerged Combustion LNG Vaporizer

The Linde Group Five Sentry Parkway East Blue Bell, PA, 19422, USA http://www.linde.com Tel: 1-610-570-6056; [email protected]

Submerged Combustion & Open Rack LNG Vaporizers

Black & Veatch 11401 Lamar Overland Park, KS 66211, USA http://www.bv.com/ Tel: 1-913-458-6166

Open Rack Vaporizers Open Rack LNG Vaporizer

I.P.S. Services 601 Jefferson, St. 3790 Houston, TX 77002, USA http://www.ips-services.com/index.html Tel: 1-713-651-7876; [email protected]

Open Rack Vaporizers Open Rack LNG Vaporizer

Air Products and Chemicals

7201 Hamilton Boulevard Allentown, PA, 18195, USA http://www.airproducts.com Tel: 1-610-481-5319; [email protected]

Open Rack Vaporizers LNG Smart® Air Vaporization

GEA Rainey 5202 W. Channel Rd. Catoosa, OK 74015-3017, USA http://www.gearainey.com Tel: 1-918-266-9217; Fax: 1-918-266-2464

POWER GENERATION

Emergency Power Generator

Diesel Engine R & J Control Inc. 58 Harding Ave. Dover, NJ 07801, USA http://www.rjcontrol.com/ Tel: 1-973.328.6880 x 13

Backup Electric Power Generators

Gas Power Generators

Storage Battery Systems Inc.

N56 W16665 Ridgewood Dr. Menomonee Falls, WI 53052-0160, USA http://www.sbsbattery.com Tel: 1-262-703-5800; Fax: 262-703-3073

LNG Turbines LNG Power Units GE Distributed Power GE Power and Water 5244 N. Sam Houston Pkwy East Houston, Texas 77032 Tel: 1-678-602-9158 Email: [email protected]

Power Generation Power Generators Caterpillar Global Construction & Infrastructure Northern South America / Central America / Caribbean Caterpillar Latin America Business Park, Torre Oeste, Piso 1, Esquina de la Ave. Principal y Ave. La Rotonda

http://www.sundyne.com/ind/cda/home/0,10



Tel: (507)305-2260 Cel: (507) 6616-3996 Fax: (507) 301-2014 Email: [email protected]

FIRE PROTECTION SYSTEM

Firewater Pumps Split Horizontal Pye-Barker 1105 Louisville Road Savannah, GA 31415, USA http://www.pyebarkerfiresafety.com Tel: 1-912-238-0303

Firewater Pumps Vertical Turbine

Firewater Jockey Pump PLANT/INSTRUMENT AIR SYSTEM

Air Compressors n/a Pye-Barker 1105 Louisville Road Savannah, GA 31415, USA http://www.pyebarkerfiresafety.com Tel: 1-912-238-0303

Instrument Air Receiver Plant Air Receiver

LNG RELIEF SYSTEM

Flare Stack Callidus Technologies (Honeywell)

7130 South Lewis, Suite 335 Tulsa, OK 74136, USA http://www.callidus.com Tel: 1-918-496-7599; Fax: 1-918-488-9450

GBA - Corona 10333 Harwin, Suite 110 Houston, TX 77036, USA http://www.gba-corona.com Tel: 1-713-773-9933; Fax: 1-713-773-9940

LNG SUPPLEMENTARY MATERIALS

Plant piping (24 to 36 in. diameter)

Stupp 12555 Ronaldson Road Baton Rouge, LA 70807-1503 Tel: 1- 225 775-8800

Berg Steel 10375 Richmond Ave # 425 Houston, TX 77042-4152 - (713) 465-1600

External pipe coatings for plant piping

Stupp, Berg Steel, 3M

3M Center St. Paul, MN 55144-1000 (1-888-364-3577)

Protection Engineering 2201 Harbor Street, Unit C Pittsburg, CA 94565 Tel: (925) 427-6200 Toll Free: 800-878-8837 [email protected]

Bredero Shaw 3838 N Sam Houston Pkwy E #300 Houston, TX 77032-3405 Tel: (281) 886-2350

Bayou Companies 5200 Curtis Lane New Iberia, LA 70560-0449 Tel: (337) 369-3761

Pipe Coatings International LLC,

9036 Vincik Ehlert Road Beasley, TX 77417 (979) 387-3150

DuPont 3700 Dunvale Houston, TX 77063 Tel: 888-315-9967

National Oil Well Varco 2530 Garrow Street, Houston – Tel: (713) 237-9793

Valves (ball valves, 24 to 36 in. diameter)

Cameron, Dresser 2175 SW Railroad Avenue Hammond, LA 70403-1443 Tel: (985) 345-6482

Cathodic protection equipment (rectifiers, test

Corrpro, Cott, Gerome 7000 Hollister St # B Houston, TX 77040 Tel: (713) 460-6020

mailto:[email protected]



stations, etc.) Tinker & Rasor 791 S. Waterman Ave. San Bernardino, CA 92408 Tel: 1-909-890-0736

Corrosion monitoring equipment

Corrpro, Cott, Gerome 7000 Hollister St # B Houston, TX 77040 Tel: (713) 460-6020

Flow measurement equipment

FMC Technologies 1803 Gears Road, Houston – Tel: (281) 591-4000

Dresser Suite B1, 19300 Hwy 59 N, Humble, TX Tel: (281) 446-6595

Control Microsystems 2401 Avenue J, Suite 200 Arlington, Texas 76006 Tel.: (817) 640-3232

Small-bore piping components (flanges, welded fittings, small valves, etc.)

Nordstrom 12307 Advance Dr - Houston, TX, 77065 Tel: (281) 890-2739

Tom Wheatley P.O. Box 842320 Houston, Texas 77284

Powell Stockham 2129 3rd Ave, S.E. Cullman, Alabama 35055 Tel: 1 (800) STOCKHAM Tel: (713)6955588

Anderson-Greenwood Pasadena, TX (main) PH: 832-261-2400

Vogt, Crane 19241 David Memorial Drive, Suite 150 Shenandoah, Texas 77385 Tel: (936) 271 6500

PIPELINE COMPONENTS Line pipe induction bends (long-radius)

BendTec 366 Garfield Avenue Duluth, MN 55802-2628 (218) 722-3770

Isolation valve actuators

Rototork, Controltron 4301 Greenbriar Drive Stafford Texas Usa 77477 Tel: (281) 240-1788

Launchers and receivers for in-line tools

T.D. Williamson, Inc 6120 South Yale, Suite 1700 Tulsa, OK 74136 Tel:: (918)-447-5000

Jamison Products 6417 Cunningham Road Houston, TX 77041 Phone: 713.466.6951

Pig passage indicators S.U.N. Engineering, Inc. 10031 E. 52nd St. Tulsa, OK 74146-5714 Toll Free: (800)224-2305

KIDD 14826 Yarberry Street Houston, TX 77039-1033 Tel: (281) 442-0270

Pipeline markers Pipeline Inspection Co. P.O. Box 55648 Houston, TX 77255-5648 Tel:: 713-681-5837

Security, SCADA and leak detection systems - components

EFA Technologies, 2701 Del Paso Road Suite 130-385, Sacramento, CA 95835 U.S.A. Tel: 916-443-8842

Heath Consultants 9030 Monroe Road Houston, TX 77061-5229 Tel: (713) 844-1300

EDM Services 3949 Heritage Oak Court Simi Valley, CA 93063 Tel: (805) 527-3300

ITT Corp 12510 Sugar Ridge Boulevard Stafford, TX 77477-3146 – Tel: (281) 504-6300

TD Williams, Girard Industries

6531 North Eldridge Parkway Houston, TX 77041-3599 Tel: (713) 466-3100



Internal Cleaning and Inspection Tools

Pigs Unlimited 23802 FM 2978 Rd # C1 Tomball, TX 77375-5078 Tel: (281) 351-2749

Knapp 1209 Hardy Street, Houston, Texas Tel: (713) 222-0146

4.4 LNG Power Generation U.S. Export Potential In reference to the proposed LNG power generating project for the ACP, the following table presents the U.S. export potential estimates utilizing the same assumptions utilized to estimate the capital cost estimates.

Table 7 Panama Canal LNG Power Generation

US – Export Potential System/Component Total Unit

Cost/$ U.S. 1.0 LNG Power Plant/Facility Systems

1.1 LNG Storage Systems 20,000,000

1.2 Gas Turbines 46,000,000

1.3 Generators and Transformers 15,000,000

1.4 Other LNG Power Plant Auxiliary Equipment (Relief valves, pipes and valves, pumps, sensors, leak detectors, cooling systems, water systems, others)

4,000,000

1.5 LNG Power Plant Instrumentation Systems and ICT Technologies for Power Plant Control Center (switch gear and breaker systems)

3,000,000

1.6 Security and Fire Prevention Systems 2,000,000

2.0 Other LNG Power Plant Professional Services

2.1 Engineering, Design, Project Management, and Commissioning 10,000,000

GRAND TOTAL $100,000,000

4.5 Professional Services for LNG Projects In terms of professional services, there is also a wide variety of services associated with the LNG terminal and power plant project that include: Technical consulting, engineering and design services

Technical, financial, and economic feasibility studies; LNG supply, shipping and receiving evaluations; Site selection and conceptual engineering; Front-end engineering / preliminary design; Pipeline system engineering.

Real-Time Vessel Maneuvering Simulations



Detailed design of LNG terminal facilities and pipeline; Procurement and expediting services for materials and equipment; Commercial, financial and legal services in connection with LNG contracts; Consulting services to the developer / owner or future operator of the project facilities; Consulting engineering services to the financial institutions.

The construction phase of the LNG project also represents areas for potential U.S. exports in the form of services including:

Jetties, breakwaters, and marine facilities and infrastructure; LNG unloading facilities plan development; LNG storage tanks and containment design, inspection, and installation; LNG vaporization and gas handling facilities planning, design, and inspection.

Finally, there are other auxiliary equipment and post-construction services that may represent opportunities for U.S. companies including for example: Auxiliary Equipment

On-site and off-site utilities and supporting infrastructure; Offsite facilities (send-out pipelines, compressor stations); valve stations, interconnections to grid systems, etc.).

Post-construction Services

Project commissioning and start-up; Operator training (including orientation, health, and safety); Operational monitoring; Reliability testing; Maintenance service contracts; Pipeline surveys, cleaning and inspection; Repairs, replacements/spare parts, and modifications; Facility expansion.

4.6 U.S. Companies – LNG Engineering, Design, and Development Services The table below presents a sample list of U.S. firms involved in providing professional and technical services that could be required to support the ACP in connection with the LNG terminal and power plan project. Other major U.S. firms involved in the actual development and construction of LNG facilities and LNG production are listed in the table below as well.

Table 8 LNG Engineering, Design, and Development U.S. Companies

ABS World Headquarters E&C Acquisition Corporation ABT Associates U.S.

Arthur Andersen Consulting (now Accenture) U.S.

Booz Allen & Hamilton, Inc. U.S. CB&I

Bechtel Black & Veatch Economic Research Associates

CHM2Hill DRI / WEFA, Inc. (Global Insight Subsidiary) U.S.

Fluor



ERM (Environmental Resources Management)

Excelerate Energy Jacobs Engineering

Foster Wheeler J. Ray McDermott Great Lakes Dredge & Dock Company U.S.

HDR SAIC ICF International

HNTB Granherne, Inc. Worley Parsons USA.

KBR - Kellogg Brown & Root LLC Akers Solutions Inc Price Waterhouse Cooper

Moffatt & Nichol URS King & Spalding

Parsons Brinckerhoff Zachary Holdings, Inc. Nathan Associates

Atkins North America AECOM Purvin & Gert

Harza Engineering (now Montgomery Watson Harza)

Cheniere Energy, Inc. Valuation Research Corp

4.7 Sample of U.S. Companies Interested in ACP Projects As part of the conduct of the DM, HEP requested assistance from the American Association of Port Authorities (AAPA). AAPA issued an email announcement to its U.S. membership providing information relative to the six strategic business areas that the ACP wishes to embark upon to diversify Canal operations. The majority of the U.S. companies that responded to the AAPA announcement demonstrated significant interest in working with the ACP in a variety of areas. For example, The Cornell Group Inc. expressed interest in most of the maritime activities outlined by the ACP as strategic business areas for development. The Cornell Group is a large engineering consulting firm that specializes in marine and port development studies and project management and is well qualified to provide these services to the ACP. Additionally, AECOM, a leading engineering firm in the U.S. and abroad, expressed the company’s desire to participate in the development of feasibility studies and professional technical and management support services for the ACP. AECOM is ranked by Engineering News-Record as the number one design firm overall, number one in transportation, and number one in ports and marine operations. AECOM is interested in providing a variety of services to the ACP, anywhere from feasibility studies to final design and project management for the implementation of the various maritime transportation projects. HDR Engineering has provided program management and feasibility study services to the ACP and the company is extremely interested in continuing to provide engineering and design services in Panama. HDR completed at least two feasibility studies for the ACP in 2013 and is prepared to take on the rest of the studies required by the ACP. Additionally, HEP met in Panama with Moffatt & Nichol representatives and the company has expressed interest in providing a variety of services to the ACP. Moffatt & Nichol is one of the largest U.S. firms involved in the port and maritime sector and the company already has an office in Panama. Atkins North America is a major U.S. engineering and management firm that specializes in maritime infrastructure design and related maritime project management. Atkins is already performing engineering and design work in Panama and the company’s Division Manager for

http://www.mwhglobal.com/



Port Practice demonstrated significant interest in working with the ACP in various maritime projects. Worley Parsons is a major U.S. engineering and management firm that performs work throughout the world and covers the areas of port and maritime infrastructure. Worley Parsons has worked in various projects including the development of LNG terminals and the company is very experienced in all aspects of maritime and port projects. Worley Parsons representatives indicated that the company has done work in Panama for several clients and the company may be interested in pursuing business opportunities with the ACP. Tran Systems, another U.S. engineering consulting firm, is nationally and internationally recognized for strategic and master planning, design capabilities and maintenance programming for port and maritime clients throughout the world. The company has significant expertise in the maritime and port development areas. Tran Systems expressed interest in working in Panama for the ACP in the various strategic projects identified by the ACP. Additionally, Kleinfelder, a U.S.-based consulting engineering company that offers port related engineering services responded to the AAPA announcement and expressed interest in the ACP projects in Panama. The company has specific relevant experience with container terminals at the Port of Long Beach and for the Costa Azul LNG Terminal in Mexico. The Louis Berger Group is a U.S. consulting firm covering the area of maritime transportation and economic analysis for transportation projects. The Louis Berger Group has an office in Panama and has performed studies in the maritime sector for various organization in Panama, including Panama Ports, MIT, ACP, AMP, and others and the company would be interested in pursuing projects with the ACP. In terms of U.S. suppliers, HEP received responses from companies like Metal Craft Marine Inc. indicating that the company currently does a significant amount of business with the ACP and Metal Craft has supplied the ACP with many crew boats and landing crafts. Metal Craft Marine is a major manufacturer of high speed aluminum patrol, crew, fire/rescue and research boats, some of which are in operation at the Canal. SSA Marine, one of the largest private port operators in the world also responded with interest in the future development and operation of port terminals and maritime facilities for the ACP. SSA Marine’s parent company Carrix, Inc. holds a partnership with Panama’s business group of the Mota and Heilbronn families as the partnership operates the Manzanillo International Terminal in Coco Solo, Colon. Additionally, a response from LB Foster Company indicated that the company is very interested in the future development of the Canal projects and the company was the ACP’s direct supplier for steel sheets piles on the PAC-4 Borinquen Coffer Dam where over 20,000 tons of steel were shipped from LB Foster’s mill in Texas via the Manzanillo International Terminal. This U.S. export was realized as part of the ongoing Panama Canal expansion project. L-3 Communications has expressed their interest in the potential supply of communications, security, and detection systems for the ACP projects and the company demonstrated a desire to learn more about the ACP projects that may require specialized communications, security and detection technologies.



Durocher Marine Company expressed their interest in marine work as it relates to the ACP proposed projects. Durocher Marine has worked in maritime infrastructure projects in the Bahamas, Dominican Republic, Trinidad and Tobago, Antigua, and other Caribbean countries and the company is interested in marine terminal projects such as ports, terminals, and other projects with the ACP. Weeks Marine Inc., one of the largest marine contractors in the U.S., expressed interest in marine infrastructure projects (ports, terminals, facilities) sponsored by the ACP. The company specializes in building of marine structures and the dredging of ports and waterways. The company’s Houston office covers the Latin America region where Weeks Marine has built numerous wharfs, piers, dock and port terminal projects, including work in Panama. Weeks Marine indicated that the company is currently pursuing projects in Panama and there is substantial interest in pursuing work with the ACP.

4.8 Additional Direct Contact with other U.S. Companies GE has a long history of leadership in the evolution of LNG technology and GE equipment is found in most LNG plants around the world. GE is a recognized technology leader in the LNG industry. GE has extensive experience as one of the world’s foremost developers of compression technology for LNG production, having supplied a variety of LNG products for virtually all of the major LNG processes. GE offers the unique ability to help customers achieve greater efficiencies at every stage of development (planning, construction, maintenance and upgrade) and every part of their operation through the entire LNG process chain (production, liquefaction, regasification and storage). GE designs and manufactures one of the industry’s most powerful LNG gas turbines and related LNG equipment. GE has built , installed, refurbished and rerated turbines, compressors and all types of supporting equipment at major LNG sites all around the globe. GE’s typical project scope includes basic and detailed civil, mechanical, electrical and instrumentation engineering; turbine(s), generator(s), main step-up transformer, fuel system, automation and control. GE offers a complete portfolio of auxiliary equipment including compressors, steam turbines, turbo-expanders, air coolers, pumps, valves and more. HEP maintained close contact with GE representatives throughout the development of the DM informing GE of the LNG terminal and power plant project for the Panama Canal. HEP arranged and coordinated a meeting in Panama between Mr. John Ingham, GE’s Technology Director for Latin America –Distributed Power and ACP’s Electrical Division staff including Mr. Boria Zachrison and Urho Gonzales to tour the ACP’s power plants and review the ACP’s plans for the replacement of power generation equipment for LNG use. ACP representatives discussed the specifics of the conversion of power plants from conventional fuel sources to LNG. As a result of the meeting and power plant tour conducted in Panama, GE representatives have a better understanding of the LNG power generation project for the ACP and wish to follow up with ACP officials in the near future. Also, as a result of the meeting in Panama, GE representatives are very interested in the overall LNG terminal and power plant project for the Panama Canal, as GE representatives confirmed the company’s capabilities for supplying the LNG and power generation technologies that are likely to be required by the LNG project in Panama.



While there are several technologies that GE is able to provide as part of the LNG project in Panama, the supply of LNG gas turbines (LMS 100) for power generation purposes, both at the LNG terminal facility and ACP power plants, offers the highest potential in terms of GE products. Other GE products that rank high in terms of U.S. export potential are LNG instrumentation and control systems and professional services in the planning, design, implementation, testing, and commissioning for LNG and power generating activities, as well as GE marine engines for Canal tugboats. Other U.S. companies that could also compete in the gas turbine market in Panama would be Solar and Pratt & Whitney and U.S. companies that could be suppliers of other equipment for the power plants at the Canal would be Rockwell Automation-Allan Bradley (transformers), Square D (power switch and gear systems), Honeywell (power control systems) and Kohler Power Systems (generators). U.S. engineering firm Parsons, is also interested in learning more about the marine project opportunities that the Panama Canal may have to offer in the near future. Parsons provides a variety of engineering consulting services in the development of maritime infrastructure and project management and the LNG terminal project may be one that could attract the company’s interest in the future.

4.9 Summary of U.S. Export Potential Assessment In summarizing the U.S. export potential section of the report, some of the leading U.S. companies involved in the production and sale of maritime, port, LNG, power generation, and other technologies are likely candidates for U.S. exports in Panama as demonstrated by the responses received from these companies. The information obtained as part of the DM indicates that the type of maritime transportation and energy technologies most likely required for the development of the ACP’s strategic business activities must be, in its majority, imported by the ACP, as these systems are not readily available in Panama. The acquisition and implementation of maritime, energy, and marine traffic control equipment and systems (for the ACP) is expected to cover a wide array of technologies that have been well developed for many years in the United States. U.S. companies have the knowledge and expertise to provide the services and technologies that will mostly likely be required by the ACP for the development of the LNG terminal and LNG power generation project. The communications with U.S. companies indicated a strong interest in supporting the ACP with the development of maritime and power generation projects. U.S. consulting companies expressed the greatest level of interest in providing engineering, planning, design, project management, and construction administration services for the proposed ACP projects. The overall majority of the responses received from U.S. companies were positive and most company representatives demonstrated an interest in the possibility of exporting their products and services to Panama.

5.0 Foreign Competition

5.1 Foreign Competition Key Elements The DM Report provides an evaluation of the foreign competition component for the proposed LNG terminal and power plant project in Panama. Due to the nature of the LNG terminal and



power plant project, as well as the modernization of the marine traffic control systems, the expectancy is for the level of foreign competition to be high in Panama. Public sector procurement in Panama is governed by a legal framework anchored in the Public Procurement Law 48 of 2011 (as amended from Law 22) which regulates government procurement. The Panamanian Procurement Law was intended to streamline and modernize Panama’s contracting system. The Law requires publication of all proposed government purchases. The Law also established Panama Compra, an internet-based procurement system through which the GoP evaluates proposals and monitors the procurement process and holds consultations for public bids, including technical specifications and tender documents. As a Panamanian independent authority, the ACP must adhere to the Panamanian procurement laws which require an open tender for most government acquisitions, as well as the selection of the lowest responsible tender price. ACP’s procurement methods were reviewed to determine that for large acquisition of systems and equipment, the ACP follows the Panamanian Procurement Law which involves tenders open to domestic and international companies. It is expected that the development of LNG terminals by the ACP would be done under a private concession program where the private sector is allowed to compete while the ACP could provide the land and other resources. The concession of an LNG terminal by the ACP is likely to be a large undertaking by the authority, thus requiring that an international concession tender be issued by Panama to attract a wide range of international private companies. Panamanian law authorizes the ACP and the AMP to enter into private concession contracts such as PPPs and other concessions for the development of maritime infrastructure and services. As such, the ACP board could exercise their authority in developing several infrastructure projects for the Panama Canal with private concessions as the main financial mechanism to induce development. The ACP envisions the use of a private concession to develop the proposed Corozal Port in the near future, and a similar scenario would be expected for the development of LNG facilities. USTDA’s involvement in the development of feasibility studies for LNG facilities at the early stage of the process could create an environment for increased interest on the part of U.S. companies and could promote the involvement of U.S. companies in the LNG terminal development project, as well as the power plant conversion activities. U.S. company involvement during the pre-design phase of project development is likely to increase the level of awareness and interest on the part of U.S. firms to participate in future tenders. ACP officials indicated their desire to introduce the LNG terminal project concept to U.S. LNG operators and suppliers with the purpose to entice U.S. firms to invest in the development and operation of the future LNG terminals at the Panama Canal. Tugboats are a major component of the Panama Canal operation and the ACP has continued to upgrade its tugboat fleet over the years. The supply of tugboat to the Canal is a very competitive market and international bids issued by the ACP usually attract fifteen to twenty different bids by international companies. Over the last fifteen years, the ACP has awarded multimillion dollar contracts for the fabrication of tugboats to Timberland Equipment Limited (Canada), Markey Machinery Company (U.S.), Macgregor-Plimsoll (Singapore), Ibercisa (Spain), and the last contract was awarded to Astilleros Armon S.A. (Spain) in the amount of U.S.$ 158.3 million.



The engines on the tugboats represent the main component of the vessel and various tugboat suppliers have used different engine types such as Deutz, GM, GE, and Wartsila engines. As of recently, GE Marine engines have been preferred by the ACP due to a higher life-cycle cost factor over a twenty year period. The last 28 tugboats received by the ACP in the last five years have GE Marine engines on them, making the GE engines the preferred engine for the Panama Canal tugboats. GE Marine along with their distributor (Marinsa) has built a business relationship with the ACP and wishes to continue to pursue future Canal business as the ACP intends to continue to upgrade its Canal tugboat fleet as well as to add additional tugboats that will be required for increased demand after the completion of the Canal expansion and the introduction of new Canal services in the areas of ports, LNG terminals, COB operations, and others. On the consulting side, U.S. companies can expect competition in the engineering and design services segments of the new proposed projects as a multitude of European and Asian companies are already in Panama. In the area of LNG terminal design and operations, Tractebel Engineering (TE), a major player in the LNG terminal business and energy development projects around the world, is already doing business in Panama as the company assisted Panama in the development of the Dos Mares Hydroelectric Power Plant. TE currently has an office in Panama and is actively seeking additional business in the country. Tractebel Engineering (TE), the Engineering Consultancy of Tractebel, has become today the Engineering Consultancy arm of the GDF SUEZ Group, although it has retained the autonomy to contract with clients outside this Group. TE has acquired more than 100 years of experience and expertise in power and more than 40 years in gas operations. TE has a turnover of over 400 million Euros per year generated from providing professional services in the energy sector with particular specialty services in LNG. TE has a total workforce of more than 3,300 highly skilled people and is represented in more than 20 countries, with affiliates in Europe, Latin America, Middle-East and Asia. TE has been involved in numerous LNG terminal projects, gas pipelines, gas storage stations and gas compression stations and is expected to represent competition to U.S. firms in Panama. The GDF Suez Group is one of the largest European energy firms heavily involved in the development of LNG infrastructure, design, operation, and maintenance. The experience of GDF Suez in gas and LNG covers a broad spectrum of services including gas and fluids pipelines, gas compression stations, LNG storage and re-gasification terminals, Offshore (floating) LNG terminals, and small scale liquefaction terminals. GDF Suez would represent strong foreign competition for U.S. firms that may pursue the LNG terminal project in Panama, as well as represent potential competition to U.S. firms seeking the ACP’s business in the power generating project for LNG conversion. Additional, firms like Mott MacDonald (UK) and HR Wallingford (UK) have substantial experience in all phases of LNG project development and these companies could represent foreign competition for U.S. firms in connection with the ACP’s LNG projects in Panama. The results of the DM findings demonstrate that there is a clear indication that European firms are well established in Panama and there is evidence that they intend to continue to compete in the Panamanian market. However, past history of the ACP reveals that the authority has a long standing record of utilizing U.S. firms for the supply of services and technologies on various sectors that affect Canal operations and administration.



An emerging foreign competitor in the construction of marine infrastructure in Panama are the Asian companies that have a presence in Panama currently operating the Port of Singapore Authority (PSA) Terminal, Hutchinson Port Holdings Limited (Hongkong) operating the Colon Port and the Port of Balboa, and Evergreen that operates the Colon Terminal in the Atlantic side or the Canal. Only one U.S. port operator firm has a presence in Panama, that being SSA Marine which operates the Manzanillo International Terminal. There is however a great number of equipment and technologies from the U.S. being utilized in the Panama Canal today. As the previous U.S. Canal Administration was in place for almost 100 years, U.S. technology is predominant in the Canal. The previous record in the utilization of U.S. equipment and systems has carried through in certain areas of Canal operation and the ACP continues to do business with several U.S. firms today. However, as the new Panamanian Administration of the ACP was instituted 2000, more European and Asian firms have entered the market and now offer the ACP technologies from these geographical areas, thus competing with U.S. companies at a higher level than before. In order to provide a representation of the type of foreign firms that have recently provided services to the ACP, the following list presents the names of these companies.

AON Corp. - UK Compagnie Nationale du Rhône (member of the Post-Panamax Consortium) -France Coyne-et-Bellier (member of the Post-Panamax Consortium) - France DHI Water & Environment - China Fearnley Consultants A/S - Norway GUPSA (Grupo Unido por el Canal S.A.) European Joint Venture Harza Engineering (now Montgomery Watson Harza) Intracorp Estrategias Empresariales, S.A. Japan Bank for International Cooperation (JBIC) JETRO (Japan) Technum (member of the Post-Panamax Consortium) Tractebel Engineering - Various European countries

In addition, ABB, Siemens, Alstom, and Rolls-Royce from Europe also provide various LNG systems including gas turbines and related equipment for LNG power plants and these companies would also be expected to compete for the LNG projects in Panama.

5.2 Market Entry Issues Competition in the maritime market (as it relates to the Panama Canal) is very competitive. While price is an important element in the acquisition process, the ACP’s procurement tendencies have demonstrated that equipment and system quality, reliability, and life-cycle cost is an important component when selecting technologies. Given the magnitude and importance of Canal operations to the ACP and to global trade, ACP officials understand that product quality and life-cycle costs are extremely important to the maintenance and operation of the Panama Canal. U.S. made products are recognized for their quality and therefore have found market acceptance in Panama. This is especially true in the ICT sector where computer systems (HP and Dell computers) and software packages require operating systems from companies like Oracle and Microsoft as the standard. Other areas where U.S. firms have experienced success in exporting products to the Panama Canal are tugboat engines from GE,



heavy duty construction equipment from Caterpillar, communications systems from Motorola, and security systems from Honeywell to name just a few. In Panama, the market for maritime systems and equipment has been increasing over the years due to the Canal expansion project. The GoP is expected to continue to modernize and upgrade maritime infrastructure with the goal to strengthen economic development for the country. The development of feasibility studies for LNG terminal and power plants could further aid U.S. companies (that face market entry obstacles and/or strong competition from foreign companies) in competing for future private concessions for LNG terminal development and operations in Panama. It is determined that for U.S. companies to become successful in penetrating the Panamanian market they must do so with the aid of local representation or through licensing agreements with the private sector. The knowledge of local regulatory and business framework in Panama is best left for the local companies that have experience and can assist U.S. companies in entering the market. Personal contact is considered a necessity when doing business in Panama with both the private and public sectors and when dealing with government sponsored tenders.

5.3 U.S.-Panama Free Trade Agreement The United States and Panama signed a trade promotion agreement (FTA) on June 28, 2007. Panama approved the FTA agreement on July 11, 2007 and the FTA agreement was signed into law in the United States on October 21, 2011. The U.S.-Panama FTA is a comprehensive free trade agreement that can result in significant liberalization of trade in goods and services, including financial services. It also includes important disciplines relating to customs administration and trade facilitation, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protection. U.S. firms will have better access to Panama's services sector than it provides to other WTO Members under the General Agreement on Tariffs in Services. All services sectors are covered under the agreement except where Panama has made specific exceptions. Moreover, Panama agreed to become a full participant in the WTO Information Technology Agreement.

5.4 Summary of Foreign Competition Assessment The DM findings determine that the foreign competition component is considered high in Panama for the development and operation of LNG terminals and for LNG power generation plants at the Panama Canal. However, with the development of the LNG feasibility study, ACP officials can be further exposed to U.S. LNG operators and technologies with the goal of building business relationships with U.S. operators and equipment suppliers that could eventually allow U.S. firms to become more competitive for future Canal projects. Furthermore, the development of the LNG feasibility study would allow U.S. consulting firms to assist the ACP in identifying the most suitable and appropriate business model for LNG development and operation, as well as the most advanced LNG technologies and introduce ACP officials to U.S. equipment and systems that in the long-term may lead to future U.S. exports.



The development of the LNG feasibility study could prove to be a catalyst in opening the door for U.S. companies to expand their services and operations into Panama and supplement and/or increase their business income.

6.0. Developmental Impact This section of the report presents the results from the assessment of the developmental impacts expected from the proposed of LNG facilities at the Panama Canal. The developmental impact assessment is separated in two distinct areas addressing the proposed projects' primary developmental impacts as well as the projects’ alternatives.

6.1 Primary Developmental Impacts The primary developmental benefits expected from the development of LNG facilities at the Panama Canal were assessed with the purpose to identify the most important and measurable benefits to Panama. The benefits that are expected to result from the development of LNG facilities at the Panama Canal will mostly consist of higher and more efficient utilization of Panama Canal land use, higher level of employment for the country, higher revenues for the ACP and the GoP, the creation of additional support to the international maritime industry, the placement of Panama at a higher competitive level in the region, allowing for amplification of Canal services to meet the huge demand for maritime service that will be induced by the completion of the Canal expansion project, and the promotion of economic development for the country. Another primary developmental impact would be the reduced time spent by vessels transiting the Canal, in the form of reduced delay, more efficient processing, better and accurate passenger and vessel information, and reduced idle time to transit the Canal. As time reduction and cost savings occur, Canal facilities are expected to accommodate additional vessel traffic and contribute to the ability to process more Canal operations and vessels. These improvements are likely to support the new business strategies that the ACP intends to provide to the maritime industry with the construction of new maritime infrastructure.

6.2 Infrastructure The maritime sector is key to Panama’s economic growth and the country’s integration in the global trade. The building of infrastructure will consist of constructing LNG facilities at the Panama Canal, including terminals, power generating plants, and other facilities to support LNG fuel services. When completed, the new LNG facilities will provide adequate infrastructure at the Canal, further assisting the ACP in the diversification of Canal services and revenues.

6.3 Technology Transfer and Productivity Enhancement Significant technology transfer opportunities could be created given that LNG technologies could eventually be brought to Panama where there is no LNG terminal at this time. Through the implementation of LNG facilities (terminal and power generation plants), the Panama Canal could increase its competitive position in the region, by expanding Canal services for its customers and for a variety of vessels that transit the Canal on an annual basis, therefore



supporting the GoP’s goals in making the Canal the premier maritime trade route and commercial hub in the Americas. The existence of an LNG terminal operated with a local labor force will provide a rich environment for learning and applying natural gas technologies. This can be a broadly useable skill in other gas liquid industries and applications. Technology transfer will occur during construction through gained understanding of LNG terminal and power generating structures. However, the direct LNG technology transfer will happen during the operational stage. After the construction stage, it is reasonable to assume that, like in other countries, local industries will develop capabilities to serve the LNG terminal by developing special services such as inspections, component repair and production capabilities. Furthermore, opportunities in LNG-related activities can formalize the LNG educational and training process, leading to entrepreneurial interest in applying the knowledge to other applications in Panama that would enhance productivity for the country.

6.4 Human Capacity Building The construction of new LNG facilities at the Panama Canal is expected to create new jobs as the LNG industry is introduced in Panama. To construct the LNG facilities requires a substantial temporary labor force, material, equipment, utilities, and a support network of material providers, parts manufacturers, transportation service providers, and more. For a two- to- three-year large industrial project such as an LNG terminal, there is typically a ramp-up of construction workers during the first 6 to 12 months, with peak construction and labor lasting about 6 to 12 months, and then a gradual ramp down of the construction labor force. It is envisioned that during the construction and during the long-term operations periods of the LNG terminal, this will require the engagement of a workforce that would include Panamanian nationals. This section discusses the number and type of workforce positions that would be needed to design, construct, and operate the proposed LNG terminal project. During the development phase, offices will need to be established by the project management consortium to oversee the planning, engineering, design, procurement, construction, start-up and commissioning activities. In addition, other companies will provide services to support the development phase. A number of these companies will be foreign registered, however, a significant number will be local (domestic) companies that will support many activities. The type of companies and local personnel categories include:

International LNG Consortium (Owner’s Project Management and Coordination); Area managers; Engineering coordinators; Public affairs representatives; Government liaison representatives; Procurement supervisors; Contracting and procurement specialists; Environmental, health, and safety supervisors; Project administrators Secretarial and clerical personnel.



The LNG terminal, from construction to operation, will require both general and specialized labor. This will, as a consequence, create a substantial number of jobs. The construction phase will result in the greatest percentage of those jobs. Construction could last two to three years (depending on the size and type of facility) and require anywhere from 800 to 1,200 person-years, in addition to thousands of person-years of indirect labor. It is estimated that up to half of these jobs may be filled by local workers. In addition to the professionals, welders, pipefitters, machinists, cement workers, carpenters, and other personnel will be sought from other trades, and for administration, security, and maintenance activities. Workers experienced and certified to work with specialized systems will be needed in the late construction stage and running through cool down, testing, and operations. Since some activities require unique LNG-specific expertise, opportunities will exist to train local laborers to work with LNG related technologies. Training of LNG terminal operators will most likely occur during the construction period. Panamanian employment could generate millions of dollars and substantial amount of work may be committed to local suppliers for material and parts needed during construction. The labor impact will diminish as the project approaches completion and begins operation. Shortly after the start of operation, the construction-related activities would subside and the operating staff could be between 20 and 40 (depending on terminal size and type), with a slightly small support staff. The direct, plus indirect labor could initially be 50 to 80 jobs, depending on ownership, contract terms, availability of required skills, and other factors. In later years, this number could increase to several hundreds if Panama develops LNG related parts and services capabilities. Combined indirect and tertiary (i.e., personal services, transportation, food industry, retail, entertainment etc.) could to be roughly 2.5 times the direct effect. As the LNG terminal ages, maintenance requirements will grow and could possibly be provided by the then-experienced local labor force.

6.5 Alternatives The alternatives to achieve the ACP’s goals to improve the Canal’s sustainability and competitive position in the global trade market were reviewed as part of the DM. The ACP has followed the recommendations presented in the Canal Master Plan and the agency has begun the evaluation to expand Canal services in the areas of port development, logistic parks, Ro-Ro terminals, COB, the development of shipyards, LNG terminals, and Top-Off operations. These strategic business areas were identified as a result of an internal market analysis done by the ACP’s Office of Planning and Business Development, where many alternatives (for other type businesses) were considered. ACP officials then selected those alternative business lines that are most likely to be aligned with the ACP’s core business and functions as the ACP intends to continue with the diversification of business opportunities for the Canal. As such, the ACP requires the development of feasibility studies to identify the necessary components and strategic plan for each priority project that includes the evaluation of the technical, financial, and economic viability of the proposed projects.



7.0. Impact on the Environment and on U.S. Labor The development of an LNG terminal and operation of LNG power generation plants at the Panama Canal will require the project to undergo a series of environmental impact analysis according to national and Canal environmental regulations. The construction of LNG facilities will most likely involve the building of marine terminal infrastructure, power generation infrastructure and supporting facilities such as berths, platforms, buildings, utility systems, and others, thus having potential impact on the environment. As with any other project, the ACP would undertake the necessary environmental reviews and would mitigate any negative impacts associated with the construction of LNG facilities. The potential environmental impacts of an LNG terminal vary substantially depending on the type and size of the facility as well as its location. Prior to construction, modeling will be needed to determine the optimal design to minimize environmental impacts. The Environmental Impact Assessment (EIA) would be completed well in advance of the decision to build the LNG terminal in order to allow decision makers to account for the environmental effects of the project when they are contemplating making the investment. The ACP has developed and implemented a comprehensive set of mitigation measures and related programs, many of which are currently in place and practiced, to ensure permanent adverse impacts to the environment and natural resources of the Canal watershed and to the surrounding population are avoided. Equally important, sufficient resources are being made available for reforestation of disturbed areas, reclamation of construction sites and work areas, and social and environmental monitoring and follow-up. Key among the most relevant prevention and mitigation measures during construction are: dredge spoil management; erosion and runoff control; wildlife and archeological findings rescue and relocation; and replacement of infrastructure and other property that might be disturbed or damaged. The ACP actively integrates sustainable development frameworks and concepts into its management of hydrologic resources whose main objectives are to provide a reliable transport route to the global ocean shipping industry and to provide a reliable source of potable water and electricity to the citizens of Panama’s central region. The ACP’s written Environmental Policy aims to: prevent and control contamination associated with operation and maintenance activities; promote the efficient use of natural resources through strengthened environmental management; applying the concept of continuous improvement through planning, implementation, review, and modification of the Canal’s operational procedures; foster collaborative efforts to protect the hydrologic resources for Canal operations and human consumption; ensure the effective communication of corporate requirements for environmental protection and conservation throughout the organization; and ensure the disclosure of the environmental policy to the public at large. In addition, the LNG projects are not expected to have a negative impact on U.S. labor, but rather the projects could further support U.S. jobs.



8.0. Qualifications This section of the report describes the U.S. Contractor's qualifications for the conduct of the feasibility study for the development of the LNG terminal and power generating facilities at the Panama Canal.

8.1 Feasibility Study for LNG Terminal and LNG Power Generation Project The Contractor shall have personnel with knowledge and experience in the development and application of LNG terminal systems and equipment, LNG power generation infrastructure and systems, LNG systems integration, and other LNG related applications that combined with advanced technologies are known and proven to enhance maritime operational efficiencies, increase the use of alternate energy sources for uses in power generation, vessel fuel, increase Canal revenues, and improve environmental conditions. The following qualifications should be required of the U.S. Contractor to be selected for the conduct the LNG terminal and power generating facilities: Technical Experience (50 points)

The Contractor shall have substantial and direct experience in all areas of LNG terminal development, LNG system applications, LNG terminal infrastructure, LNG operational systems, including LNG power generation, LNG facilities and maintenance systems, including specific experience in the design, installation, operation, and maintenance of LNG terminals and power generating systems and equipment. It is paramount that the Contractor has full knowledge and complete understanding of all concepts and practices in developing recommendations for the application LNG terminal and power generation systems, including IT operations and technology applications, experience in the development of system-wide LNG integration, development of LNG master plans, and development of LNG equipment and system specifications.

The Contractor shall have substantial and direct experience and actual past involvement

in studying, defining, and recommending LNG terminal and LNG power generating plans (including all necessary LNG terminal systems and equipment). The U.S. Contractor shall be knowledgeable in the proper use of LNG terminal and power generating systems technical standards, regulations, and specifications.

Financial Experience (20 points)

The Contractor shall have direct experience in the areas of conducting economical and financial analysis for the application and implementation of LNG terminals and power generating infrastructure along with related equipment and systems. The Contractor shall have extensive experience in the development of capital investment programs for LNG infrastructure and technologies.

Additional experience and prior involvement in identifying eligible financial resources for

the acquisition and implementation of LNG related technologies (with assistance from the private sector and /or multilateral financial institutions) would be important. The Contractor shall have expertise in conducting market demand analysis for LNG terminals and LNG power generating facilities.



The Contractor shall have experience in developing plans for promoting private sector participation in financing and operating LNG terminals and services. The Contractor shall have substantial expertise in the analysis of the various LNG terminal financing and operating models.

The Contractor shall have substantial experience in developing and implementing the

necessary legal, regulatory, and institutional framework under which LNG infrastructure and related technologies are financed and operated.

Developmental Impact Experience (5 points)

The Contractor shall have experience in analyzing and formulating potential developmental impacts as it relates to the application and development of LNG terminals and LNG power generating plants. The Contractor shall have experience in the development and identification of LNG terminal benefits including the areas of infrastructure, market oriented reforms, human capacity building, technology transfer and productivity enhancement, and other developmental benefits associated with LNG terminal development and LNG power generation projects, such as spin-off effects and other benefits.

International Experience (5 points)

It is preferred that the Contractor have experience at the international level, preferably with experience in Latin America.

Work Plan and Project Methodology (20 points)

Adequacy of the proposed work plan and proposed feasibility study approach in responding to the specified Terms of Reference for all activities identified in the TOR. Soundness and thoroughness of the technical approach and work plan presented in the technical proposal and the overall quality and succinctness of the technical proposal. The technical proposal shall include the identification of all key staff proposed for the conduct of the technical assistance with their respective qualifications, availability for the project, and a staffing schedule for each activity.

9.0 Justification This section of the report outlines the justification for the LNG Terminal and LNG Power Plant Project.

9.1 Panama Canal LNG Terminal and LNG Power Generation Project The development of LNG facilities for the Panama Canal (terminal and power generation plants) will focus on capturing the value that the Canal provides to each segment of the market it serves. The main purpose for the development of LNG facilities is to increase the ACP’s ability to benefit from the growing traffic demand and associated businesses that are expected to thrive in the near future. The economies of scale associated with the growth of the Canal in the near future will allow the ACP to substantially improve its productivity and expand the Canal



core services for increased services and growth which will translate into higher employment levels for Panama and increased economic development for the country. Based on the overall DM assessment, HEP has determined that the ACP has identified the need to implement state-of-the-art LNG facilities (terminals and power generating plants) including related systems and technologies. The ACP has demonstrated a continued interest in further investing in Panama’s largest and most important piece of infrastructure in the country with the intent to promote and increase maritime transportation and economic development for the country, as well as strengthening global trade. The ACP wishes to continue to expand and modernize its services and operations through the development of ports, Ro-Ro terminals, COB operations, logistic parks, shipyards, Top-Off operations, LNG terminals and LNG power plants. The implementation of LNG terminals and LNG power generation plants will require the physical construction of the terminal infrastructure and the conversion of conventional power plants into LNG power generating systems that is expected to support Canal operations, increase revenue, and strengthen the Canal’s competitive position in the maritime service market. Even with the economic downturn of recent years, the ACP have managed to generate substantial profits and has continued to invest in Canal development projects that have received financial assistance from several international development agencies. The type of LNG technologies that are likely to be required for the proposed LNG projects are readily available from U.S. companies and therefore available for export to Panama. Based on the assessment conducted as part of the DM, HEP has determined that funding a feasibility study for the implementation of an LNG terminal and modernization of the ACP’s power plants is justified and meets USTDA grant funding requirements. It is clear that the technical expertise needed to evaluate the potential use of LNG technologies for the ACP will have to come from foreign firms. The DM visit was timely in the sense that USTDA is now able to offer assistance for the development of an LNG project that carries a high priority for the ACP.

10.0 Terms of Reference This section of the report presents the feasibility study’s Terms of Reference (TOR) for the Panama Canal LNG Terminal and Power Generation Project.

10.1 Panama Canal LNG Terminal and Power Generation Project The U.S. Contractor, along with the development of the implementation plan, shall identify and recommend the type of infrastructure required for the project, as well as the use of LNG technologies that would be required to support the ACP in the generation of electrical power, distribution of LNG as an alternative fuel source for vessels in Panama, and retrofitted ACP tugboats and dredges. The U.S. Contractor shall focus its analysis and identification on proven technologies that are available in the market/industry at the time of the development of the feasibility study as well as those that could add value to the core business of the ACP.



11.1 Panama Canal LNG Terminal and Power Generation Project Feasibility Study 11.1.2 Personnel Requirements and Costs The following outlines the personnel requirements associated with the LNG Feasibility Study. Personnel Requirements LNG Program Director The individual in the capacity of LNG Program Director will be responsible for overseeing the feasibility study work and will provide the necessary leadership and support to insure a successful completion of the feasibility study according to the specified TOR. The individual in this capacity will have at a minimum, 20 years of experience in the development and implementation of maritime LNG terminals and LNG terminal technologies. The LNG Program Director shall have particular experience and substantial knowledge in marine LNG terminal development, feasibility studies for LNG terminals, LNG terminal design and operations, analysis of LNG operating models, LNG terminal financing, as well as a comprehensive knowledge of maritime LNG terminal technologies and systems. The LNG Program Director shall have extensive experience and direct practical knowledge of maritime LNG terminal infrastructure development (jetties, breakwaters, and maritime facilities) LNG terminal facilities, technical, financial, and economic experience for LNG terminal feasibility studies, LNG supply, shipping, and receiving systems, LNG terminal site selection and conceptual engineering, LNG terminal front-end engineering and preliminary design for maritime LNG terminals, detail design of LNG terminal facilities and pipeline systems, pipeline systems engineering, LNG unloading facilities and technologies, LNG storage tanks and containment design, inspection, and installation, LNG vaporization and gas handling facilities planning, design, implementation, and operations, commercial, financial, and legal services experience in connection with LNG contracts and operating of LNG terminals, consulting services experience for LNG owners and developers of LNG terminals, LNG terminal operating models, LNG project commissioning and start-up, and LNG terminal on-site and off-site utilities and supporting infrastructure, and LNG power plant planning, design, and operations. Particular experience and substantial knowledge in the development of LNG systems and maritime LNG terminal systems deployment plans for LNG operations, safety, and security as well as knowledge and experience in LNG applications and procedures for power generation and other LNG uses. LNG Project Manager The individual in the capacity of LNG Project Manager will be responsible for managing the feasibility study work in its entirety. The Project Manager will be responsible for establishing the feasibility study’s strategies, goals, and objectives together with the LNG Program Director and the project’s stakeholders. The individual in this capacity will be responsible for directing and supervising the work according to the specified TOR including schedules, meeting coordination, and quality control of all deliverables.



The person in this capacity will have experience in the evaluation of institutional, legal, and regulatory issues associated with the implementation of maritime LNG terminals and related LNG technologies and applications. The individual in this capacity will have at a minimum, 20 years of experience in the development and implementation of maritime LNG terminals and LNG terminal technologies. The LNG Program Manager shall have specific experience and substantial knowledge in marine LNG terminal development, feasibility studies for LNG terminals, LNG terminal design and operations, analysis of LNG operating models, LNG terminal financing, as well as a comprehensive knowledge of maritime LNG terminal technologies and systems. The LNG Project Manager shall have extensive experience and direct practical knowledge of maritime LNG terminal infrastructure development (jetties, breakwaters, and maritime facilities) LNG terminal facilities, technical, financial, and economic experience for LNG terminal feasibility studies, LNG supply, shipping, and receiving systems, LNG terminal site selection and conceptual engineering, LNG terminal front-end engineering and preliminary design for maritime LNG terminals, detail design of LNG terminal facilities and pipeline systems, pipeline systems engineering, LNG unloading facilities and technologies, LNG storage tanks and containment design, inspection, and installation, LNG vaporization and gas handling facilities planning, design, implementation, and operations, commercial, financial, and legal services experience in connection with LNG contracts and operating of LNG terminals, consulting services experience for LNG owners and developers of LNG terminals, LNG terminal operating models, LNG project commissioning and start-up, and LNG terminal on-site and off-site utilities and supporting infrastructure. Additionally, the LNG Project Manager shall have substantial knowledge of the various methods of financing LNG terminals for terminal owners and developers/operators and expertise in the development of LNG market demand analysis. LNG and Maritime Terminal Engineer The individual in the capacity of LNG and Maritime Terminal Engineer will be responsible for evaluating existing maritime infrastructure, conducting the site selection process for alternative locations for potential LNG terminal construction, and determining the needs for future LNG infrastructure projects that will be required to construct the maritime LNG terminal. The LNG and Maritime Terminal Engineer shall have extensive experience and direct practical knowledge of maritime LNG terminal infrastructure development (jetties, breakwaters, and maritime facilities), LNG terminal facilities, technical, financial, and economic experience for LNG terminal feasibility studies, LNG supply, shipping, and receiving systems, LNG terminal site selection and conceptual engineering, LNG terminal front-end engineering and preliminary design for maritime LNG terminals. The individual in the capacity of LNG and Maritime Terminal Engineer will be responsible for evaluating the marine infrastructure needs for the implementation of a state-of-the-art LNG terminal and related LNG applications, as well as assisting the LNG Project Manager in identifying the needs to develop the LNG terminal infrastructure and project implementation plans. The individual in this capacity will be primarily responsible for identifying the needs, proposing solutions and developing the functional design concepts for the LNG terminal infrastructure. The individual serving in the capacity of LNG and Maritime Terminal Engineer will have a minimum of 20 years of direct experience in maritime ports, terminals, and LNG terminal development.



LNG Systems Engineer The individual in this capacity will be primarily responsible for identifying the needs, proposing solutions and developing the functional design and technical specifications for the various LNG systems and equipment that are recommended by the feasibility study. The individual serving in the capacity of LNG Systems Engineer will have a minimum of 20 years of direct experience in LNG systems engineering and applications, including the areas of LNG supply, shipping, and receiving systems, LNG terminal site selection and conceptual engineering, LNG terminal front-end engineering and preliminary design for maritime LNG terminals technologies, design of LNG terminal systems and pipeline systems, pipeline systems engineering, LNG unloading facilities and technologies, LNG storage tanks and containment design, inspection, and installation, LNG power plant systems, LNG vaporization and gas handling facilities planning, design, and implementation, as well as other LNG technology applications. An individual in the capacity of LNG Systems Engineer will oversee all aspects of LNG system integration functions for the project. The individual in this capacity will be responsible for reviewing and developing the system integration aspects for those LNG technologies and systems that are ultimately recommended for implementation as part of the feasibility study. Electrical Engineer (LNG Power Generation) An individual in the capacity of Electrical Engineer will oversee all aspects of the feasibility study covering the areas of LNG power generation including power generation requirements for the LNG terminal and power generating plants and systems for the ACP’s power plants. This includes the review and analysis of all of the ACP’s conventional power plants with a focus on the potential conversion of existing power plants to LNG usage and the possibility of integration of existing power generating systems and future systems, as well as developing the requirements for the ultimate power generation infrastructure for the ACP. The individual in this capacity will be responsible for evaluating all LNG power generation technologies, infrastructure, and requirements for the implementation. The Electrical Engineer will be responsible for determining the needs for upgrading existing power generating technologies, identifying and prioritizing future LNG power generating systems and equipment that the feasibility study recommends, as well as responsible for the development of technical specifications for the recommended power generating systems and defining the technical integration needs for the various power plants at the Panama Canal. The individual in this capacity will be primarily responsible for identifying the needs, proposing solutions and developing the LNG power generating functional design/infrastructure for the recommended LNG power generation systems to be implemented at the Panama Canal. The individual proposed will have at a minimum, 20 years of direct experience in advanced LNG power generation engineering, including knowledge and experience in LNG power generation operations and related technologies. Marine Engine Engineer (LNG Engine Retrofit) An individual in the capacity of Marine Engine Engineer will oversee all aspects of the feasibility study covering the areas of LNG uses for Canal tugboats and dredges, including the evaluation of the retrofit of existing tugboats and dredges with LNG engines. This includes developing the



requirements for all recommended retrofits and the engine specifications and supplementary equipment required for all retrofits. The individual in this capacity will be responsible for evaluating all LNG marine engine technologies as well as LNG infrastructure requirements for the operation of retrofitted tugboats and dredges. The Marine Engine Engineer will be responsible for determining the needs for upgrading existing marine engine technologies, identifying and prioritizing future LNG engines and equipment that the feasibility study recommends, as well as responsible for the development of technical specifications for the recommended LNG engines and related systems and defining the technical integration needs for existing tugboats and dredges at the Panama Canal. The individual in this capacity will be primarily responsible for identifying the needs, proposing solutions and developing the LNG engine and equipment functional design. The individual in this capacity will have at a minimum, 20 years of direct experience in advanced marine engine operations, maintenance, and gas engine retrofits. Economic, Financial, and Environmental Personnel The individuals that work in the economic and financial aspects of the feasibility study will be responsible for the development of the market demand analysis for the entire LNG feasibility study. Additionally, the individuals that work in the economic, financial, legal, and environmental aspects of the feasibility study will be responsible for the successful completion of the tasks involving the review, analysis, and recommendations of the economic and financial aspects of the feasibility study, as well as any legal implications and environmental impacts that may result from the implementation of the LNG terminal and LNG power generating systems. Individuals in the various capacities (economic, financial, legal, and environmental) will have (each in his/her individual area of expertise) a minimum of 15 years of experience in their respective fields. Environmental and legal services are expected to be performed by local firms. Administrative Staff An individual(s) in the capacity of administrative staff will be responsible for all administrative work in connection with the feasibility study including typing of all reports, correspondence, documentation, preparation of presentations, and all other aspects of administrative services needed to support the members of the U.S. Contractor’s team. The individual(s) in this capacity will have experience in secretarial/administrative services with a strong background in technical report preparation, graphics, tables, etc.

11.2 Panama Canal LNG Terminal and Power Generation Project - Budget The following tables present the feasibility study’s budget for the Panama Canal LNG Terminal and Power Generation Project.



Table 9

Feasibility Study Personnel Budget

(Number of Days)

TASKS LNG Program Director

LNG Project Manager

LNG/Terminal Engineer

LNG Systems Engineer

Electrical Engineer

Marine Engineer

Econ./Finan./ Legal/ Environ. Staff

Admin. Staff

Task 1 5 10 5 5 5 5 0 5

Task 2 5 15 10 0 0 0 25 15

Task 3 10 20 15 15 15 15 0 15

Task 4 10 20 15 15 15 15 0 15

Task 5 5 15 10 10 10 5 20 15

Task 6 5 5 0 0 0 0 10 5

Task 7 0 0 0 0 0 0 5 2

Task 8 5 10 3 2 5 2 5 5

Task 9 5 15 10 10 10 5 5 15

Task 10 5 15 5 5 5 3 5 15

TOTAL 55 125 73 62 65 50 75 107

Daily Rate ($/day)

$1,500 $1,400 $1,300 $1,300 $1,250 $1,000 $1,000 $450.00

Value (U.S. $)

$82,500 $175,000 $94,900 $80,600 $81,250 $50,000 $75,000 $48,150

TOTAL VALUE (U.S. $)

$687,400

11.3 Other Direct Costs The following table provides information regarding the trips that are estimated for the conduct of the feasibility study.

Table 10

Trip Expenses

Personnel assigned to each trip

Trip 1 Trip 2 Trip 3 Trip 4 Trip 5 Trip 6

(Days) (Days) (Days) (Days) (Days) (Days)

LNG Program Director 10 10 10 10 10 5

LNG Project Manager 15 15 15 15 15 5

LNG/Terminal Engineer 10 10 10 10 10 0

LNG Systems Engineer 10 10 10 10 10 0

Electrical Engineer 10 10 10 10 10 0



Marine Engine Engineer 10 10 10 10 5 0

Economic/Financial/Legal/Env. Personnel

0 10 0 5 5 0

Total Days 65 75 65 70 65 10

Air Travel $7,200.00 $8,400.00 $7,200.00 $8,400.00 $8,400.00 $2,400.00

Per diem ($272) $17,680.00 $20,400.00 $17,680.00 $19,040.00 $17,680.00 $2,720.00

Ground transportation $4,000.00 $5,000.00 $4,000.00 $4,500.00 $5,000.00 $700.00

TOTAL EXPENSES PER TRIP

$28,880.00 $33,800.00 $28,880.00 $31,940.00 $31,080.00 $5,820.00

TOTAL TRIP EXPENSES $160,400.00

The following table summarizes all the costs associated with the development of the LNG Terminal and Power Generating Project Feasibility Study which has been estimated to be U.S. $878,800.

Table 11

LNG Terminal Feasibility Study Total Cost

Amount in U.S. $

Feasibility Study Personnel Costs $687,400.00

Trip Expenses $160,400.00

Reproduction & Binding $3,000.00

Courier Services $2,000.00

Communications $3,000.00

Interpreter/Translation Services $23,000.00

TOTAL $878,800.00

11.4 Panama Canal LNG Terminal and Power Generation Feasibility Study Schedule The feasibility study is expected to take eight months to be completed and the schedule below outlines the different tasks and their expected period for completion.



Table 12 Project Schedule

Task No. Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8

Task 1

Task 2

Task 3

Task 4

Task 5

Task 6

Task 7

Task 8

Task 9

Task 10

12.0 Recommendations This section of the report outlines the DM recommendations as it pertains to the LNG feasibility study for the ACP. The Panama Canal represents the cornerstone of Panama’s economy. It is therefore imperative that the Canal continue to be useful and attractive to its users for the benefits of all Panamanians. As such, the Canal must respond to changes in world trade patterns, anticipating its requirements and thereby succeeding in facing the challenge of maintaining its role as the motor of economic growth for Panama. In order to guarantee and increase the benefits brought by the Canal and to maintain the long term sustainability of the level of its contributions to the national treasury, it is important for Panama to secure the Canal’s competitiveness and strategic participation as a key route in world trade. The ACP now seeks to enter into new business lines that will complement Canal services, and in order to do that, ACP officials have outlined a vision for growth that is based in the diversification of Canal services with the purpose of establishing the direction that the Canal must follow to continue to be competitive and profitable. The Canal has the opportunity to benefit from a growing commercial and transit demand, which is projected to be profitable based on studies conducted by the ACP.



ACP officials wish to take advantage of the ever-increasing forecasted demand of cargo and commerce, maintain a competitive edge for the Canal, as well as adding value to this important transit route. The necessity to expand and diversify Canal services responds to the projected growth in the maritime commerce within the Panama route and represents an opportunity to make the Canal more efficient, more competitive, and more profitable. Additionally, in order to support existing and future Canal infrastructure and services, the ACP wishes to modernize its twenty year old marine traffic control system with the use of modern technologies. Based on the six different strategic business areas identified by the ACP, HEP determined that the need for the development of a feasibility study for an LNG terminal and LNG power generation in Panama is a priority for the ACP. The ACP wishes to examine the preliminary market projections and demand for LNG related operations and services in the Panama Canal and to identify the various market scenarios in the LNG business where the ACP could realize economic benefit. Based on the findings from an LNG feasibility study and defined market trends, the ACP intends to select the most promising type of LNG business activities and the potential benefits for the ACP by capturing new business in the LNG market. The ACP’s financial standing is sound and the authority is expected to continue to generate substantial profits in the coming years and after the completion of the Panama Canal expansion. The DM financial assessment involved the review of the ACP’s capital improvement program to determine how the agency supports the specific areas of Canal infrastructure and technologies. Also, as part of the financial assessment, current revenues that support the overall operations at the ACP were reviewed to conclude that after expenditures and debt service payments, the ACP still operates with substantial profits, sufficient to continue to support new business development initiatives. Revenues collected by the ACP are generated from Canal transit tolls. The financial review conducted for the ACP indicates that the agency should demonstrate a healthy financial standing and excellent financial performance in future years, as revenues and after taxes profits are expected to increase from higher level vessel traffic (more tolls) through the expanded Panama Canal. The ACP has a history of funding Canal infrastructure and modernization projects, as well as technology modernization with a combination of the authority’s own resources supplemented at times by financial loans from local private sector banks/institutions and multilateral financing institutions such as World Bank, IDB, CAF, and others. The World Bank, IFC, CAF, EIB, Japan Bank for International Cooperation, and other international financial institutions have recognized the interest and commitment on the part of the ACP to further improve maritime transportation services in Panama, and as such several loan packages have been authorized over time to improve Canal infrastructure and services. The ACP’s diversification of its assets and services combined with the increases in vessel traffic has proven to strengthen the authority’s financial standings while providing quality maritime services for global trade. A review of the proposed LNG Terminal and Power Generation Project indicates that this activity is economically, financially, and technically feasible and it could represent substantial opportunities for U.S. exports in technologies and services. The DM results indicate that U.S. companies have the expertise required to provide the services and technologies likely to be required by the LNG project and the modernization of the marine traffic control system in Panama. The overall responses indicate that there is sufficient interest



on the part of U.S suppliers and U.S. professional service providers to pursue business with the ACP in a variety of areas, including LNG terminal development and power generation as well as in the development and implementation of marine traffic control systems. While foreign competition is considered high for U.S. companies, the quality, reliability, and accuracy of U.S. technologies is highly regarded by ACP officials. The U.S. export potential has been estimated at U.S. $ 345 million for the LNG Terminal and Power Generation Project. USTDA could play a key role in promoting U.S. business activities in the Panama Canal by financing the proposed LNG feasibility study, which could open the door for U.S. companies to export their products to Panama. HEP’s goal was to identify maritime opportunities including specific markets and projects that offer promising economic benefits to the ACP and those that offer substantial U.S. export opportunities for USTDA and U.S. firms. HEP has met that goal by identifying the need to explore the development of LNG terminals and LNG power plants for the ACP, as this project represents significant U.S. export potential. In order to identify the most suitable maritime terminal systems and information technologies for Canal and maritime applications, HEP recommends that USTDA support the ACP as the latter embarks upon a planning process aimed at aligning the ACP’s maritime terminal infrastructure investments with its core business and policy objectives to further support the modernization and expansion of the Panama Canal. The DM findings indicate that after the consideration of all the elements investigated in connection with the ACP’s LNG proposed project, that USTDA should consider funding the Panama Canal LNG Terminal and Power Generation Project Feasibility Study in the amount of U.S. $878,800.00 and select the ACP as the Grantee for the project.

D. MARINE TRAFFIC CONTROL CENTER SYSTEM MODERNIZATION PROJECT

1.0 Project Description The ACP has under its responsibilities the operation and management of all marine traffic control functions within the Panama Canal. The monitoring, supervision, and control functions for maritime traffic along the Canal is performed by ACP staff at the Panama Canal Marine Traffic Control Center (MTC). The center has been in operation now for more than 30 years and last year the ACP engaged in the planning process for the start of the modernization of the control center as the current technologies at the center are obsolete and dysfunctional. HEP and USTDA representatives met with Mr. Jacinto Wong, Vice-President of Information Technologies (IT) for the ACP, who reported that the ACP’s capital investment program includes several projects to be completed over the next five years and these projects include the following:

Communications Upgrade Project; Modernization of the Marine Traffic Control Center for Canal Operations; Software Data Replacement; Financial System Replacement;

A N N E X 3

USTDA NATIONALITY REQUIREMENTS

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NATIONALITY: 1) Application A U.S. firm that submits a proposal must meet USTDA’s nationality requirements as of the date of submission of the proposal and, if selected, must continue to meet such requirements throughout the duration of the USTDA-funded activity. These nationality provisions apply to all portions of the Terms of Reference that are funded with the USTDA grant. 2) Definitions A "U.S. firm" is a privately owned firm that is incorporated in the U.S., with its principal place of business in the U.S., and which is either (a) more than 50% owned by U.S. citizens and/or non-U.S. citizens lawfully admitted for permanent residence in the United States, or (b) has been incorporated in the U.S. for more than three (3) years prior to the issuance date of the request for proposals; has performed similar services in the U.S. for that three (3) year period; employs U.S. citizens in more than half of its permanent full-time positions in the U.S.; and has the existing capability in the U.S. to perform the work in question. A partnership that is organized in the U.S., has its principal place of business in the U.S., and is more than 50% owned by U.S. citizens and/or permanent residents, qualifies as a “U.S. firm”. A nonprofit organization, such as an educational institution, foundation, or association, also qualifies as a “U.S. firm” if it is incorporated in the U.S. and managed by a governing body, a majority of whose members are U.S. citizens and/or permanent residents. SOURCE AND ORIGIN: Definitions “Source” means the country from which shipment is made. "Origin” means the place of production, through manufacturing, assembly or otherwise. Questions regarding these nationality, source and origin requirements may be addressed to the USTDA Office of General Counsel. Version 01.17.2014

A N N E X 4

USTDA GRANT AGREEMENT, INCLUDING MANDATORY CONTRACT CLAUSES

A N N E X 5

TERMS OF REFERENCE (FROM USTDA GRANT AGREEMENT)

A N N E X 6

U.S. FIRM INFORMATION FORM

USTDA-Funded Feasibility Study, Technical Assistance, or Training Grant

U.S. Firm Information Form

This form is designed to enable the U.S. Trade and Development Agency (“USTDA”) to obtain information about entities and individuals proposed for participation in USTDA-funded activities. Information in this form is used to conduct screening of entities and individuals to ensure compliance with legislative and executive branch prohibitions on providing support or resources to, or engaging in transactions with, certain individuals or entities with which USTDA must comply.

USTDA Activity Number [To be completed by USTDA]

Activity Type [To be completed by USTDA] Feasibility Study Technical Assistance Other (specify)

Activity Title [To be completed by USTDA]

Full Legal Name of U.S. Firm

Business Address (street address only)

Telephone Fax Website

Year Established (include any predecessor company(s) and year(s) established, if appropriate). Please attach additional pages as necessary.

Type of Ownership Publicly Traded Company Private Company Other (please specify)

Please provide a list of directors and principal officers as detailed in Attachment A. Attached? (Not Applicable for U.S. Publicly Traded Company)

Yes

If Private Company or Other (if applicable), provide a list of shareholders and the percentage of their ownership. In addition, for each shareholder that owns 15% or more shares in U.S. Firm, please complete Attachment B.

Is the U.S. Firm a wholly-owned or partially owned subsidiary?

Yes No

If so, please provide the name of the U.S. Firm’s parent company(ies). In addition, for any parent identified, please complete Attachment B.

Is the U.S. Firm proposing to subcontract some of the proposed work to another firm?

Yes No

If yes, U.S. Firm shall complete Attachment C for each subcontractor. Attached?

Yes Not applicable

Project Manager

Name Surname Given Name

Address Telephone Fax Email Negotiation Prerequisites Discuss any current or anticipated commitments which may impact the ability of the U.S. Firm or its subcontractors to complete the Activity as proposed and reflect such impact within the project schedule.

Identify any specific information which is needed from the Grantee before commencing negotiations.

U.S. Firm may attach additional sheets, as necessary.

U.S. Firm’s Representations U.S. Firm shall certify to the following (or provide an explanation as to why any representation cannot be made):

1. U.S. Firm is a [check one] Corporation LLC Partnership Sole Proprietor

Other:

duly organized, validly existing and in good standing under the laws of the State of: [insert state] .

The U.S. Firm has all the requisite corporate power and authority to conduct its business as presently conducted, to submit this proposal, and if selected, to execute and deliver a contract to the Grantee for the performance of the USTDA Activity. The U.S. Firm is not debarred, suspended, or to the best of its knowledge or belief, proposed for debarment or ineligible for the award of contracts by any federal or state governmental agency or authority.

2. The U.S. Firm has included herewith, a copy of its Articles of Incorporation (or equivalent charter or document issued by a designated authority in accordance with applicable laws that provides information and authentication regarding the legal status of an entity) and a Certificate of Good Standing (or equivalent document) issued within 1 month of the date of signature below by the State of: [insert state] . The U.S. Firm commits to notify USTDA and the Grantee if it becomes aware of any change in its status in the state in which it is incorporated. USTDA retains the right to request an updated certificate of good standing. (U.S. publicly traded companies need not include Articles of Incorporation or Good Standing Certificate)

3. Neither the U.S. Firm nor any of its directors and principal officers have, within the ten-year period preceding the submission of this proposal, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a federal, state or local government contract or subcontract; violation of federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating federal or state criminal tax laws, or receiving stolen property.

4. Neither the U.S. Firm, nor any of its directors and principal officers, is presently indicted for, or otherwise criminally or civilly charged with, commission of any of the offenses enumerated in paragraph 3 above.

5. There are no federal or state tax liens pending against the assets, property or business of the U.S. Firm. The U.S. Firm, has not, within the three-year period preceding the submission of this proposal, been notified of any delinquent federal or state taxes in an amount that exceeds US$3,000 for which the liability remains unsatisfied. Taxes are considered delinquent if (a) the tax liability has been fully determined, with no pending administrative or judicial appeals; and (b) a taxpayer has failed to pay the tax liability when full payment is due and required.

6. The U.S. Firm has not commenced a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself of its debts under any bankruptcy, insolvency or other similar law. The U.S. Firm has not had filed against it an involuntary petition under any bankruptcy, insolvency or similar law.

7. The U.S. Firm certifies that it complies with USTDA Nationality, Source, and Origin Requirements and shall continue to comply with such requirements throughout the duration of the USTDA-funded activity. The U.S. Firm commits to notify USTDA and the Grantee if it becomes aware of any change which might affect U.S. Firm’s ability to meet the USTDA Nationality, Source, and Origin Requirements.

The U.S. Firm shall notify USTDA if any of the representations are no longer true and correct. U.S. Firm certifies that the information provided in this form is true and correct. U.S. Firm understands and agrees that the U.S. Government may rely on the accuracy of this information in processing a request to participate in a USTDA-funded activity. If at any time USTDA has reason to believe that any person or entity has willfully and knowingly provided incorrect information or made false statements, USTDA may take action under applicable law. The undersigned represents and warrants that he/she has the requisite power and authority to sign on behalf of the U.S. Firm.

Name

Signature Title Full Legal Name of U.S. Firm Date

Title Name (e.g., Director, President, Chief Executive

Officer, Vice-President(s), Secretary, Treasurer)

* Please place an asterisk (*) next to the names of those principal officers who will be involved in the USTDA-funded activity

Surname

Given Name

Middle Name

ATTACHMENT A


U.S. Firm Information Form – Directors and Principal Officers

(Not Applicable for U.S. Publicly Traded Company) Provide a list of all directors and principal officers (e.g., President, Chief Executive Officer, Vice-President(s), Secretary and

Treasurer). Please provide full names including surname and given name. USTDA Activity Number [To be completed by USTDA]


Full Legal Name of Entity

ATTACHMENT B


U.S. Firm Information Form – Shareholder(s) and Parent Company(ies)

If applicable, U.S. Firm provided a list of shareholders and the percentage of their ownership. This form shall be completed for each shareholder that owns 15% or more shares in U.S. Firm, as well as any parent corporation of the U.S. Firm (“Shareholder”). In addition, this form shall be completed for each shareholder identified in Attachment B that owns 15% or more shares in any Shareholder, as well as any parent identified in Attachment B. USTDA Activity Number [To be completed by USTDA]


Full Legal Name of U.S. Firm

Full Legal Name of Shareholder

Business Address of Shareholder (street address only)

Telephone number Fax Number


Country of Shareholder’s Principal Place of Business

Please provide a list of directors and principal officers as detailed in Attachment A. Attached? Yes Type of Ownership Publicly Traded Company

Private Company Other

If applicable, provide a list of shareholders and the percentage of their ownership. In addition, for each shareholder that owns 15% or more shares in Shareholder, please complete Attachment B.

Is the Shareholder a wholly-owned or partially owned subsidiary?

Yes No

If so, please provide the name of the Shareholder’s parent(s). In addition, for any parent identified, please complete Attachment B.

Shareholder may attach additional sheets, as necessary.

ATTACHMENT C


Subcontractor Information Form

This form is designed to enable the U.S. Trade and Development Agency (“USTDA”) to obtain information about entities and individuals proposed for participation in USTDA-funded activities. Information in this form is used to conduct screening of entities and individuals to ensure compliance with legislative and executive branch prohibitions on providing support or resources to, or engaging in transactions with, certain individuals or entities with which USTDA must comply. USTDA Activity Number [To be completed by USTDA]


Full Legal Name of Prime Contractor U.S. Firm (“U.S. Firm”)

Full Legal Name of Subcontractor

Business Address of Subcontractor (street address only)

Telephone Number

Fax Number


Subcontractor Point of Contact

Name Surname Given Name

Address

Telephone Fax Email

Subcontractor’s Representations Subcontractor shall provide the following (or any explanation as to why any representation cannot be made), made as of the date of the proposal:

1. Subcontractor is a [check one] Corporation LLC Partnership Sole Proprietor

Other

duly organized, validly existing and in good standing under the laws of: [insert state (if U.S.) or country] . The subcontractor has all the requisite corporate power and authority to conduct its business as presently conducted, to participate in this proposal, and if the U.S. Firm is selected, to execute and deliver a subcontract to the U.S. Firm for the performance of the USTDA Activity and to perform the USTDA Activity. The subcontractor is not debarred, suspended, or to the best of its knowledge or belief, proposed for debarment or ineligible for the award of contracts by any federal or state governmental agency or authority.

2. Neither the subcontractor nor any of its directors and principal officers have, within the ten-year period preceding the submission of the Offeror’s proposal, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a federal, state or local government contract or subcontract; violation of federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating federal or state criminal tax laws, or receiving stolen property.

3. Neither the subcontractor, nor any of its directors and principal officers, is presently indicted for, or otherwise criminally or civilly charged with, commission of any of the offenses enumerated in paragraph 2 above.

4. There are no federal or state tax liens pending against the assets, property or business of the subcontractor. The subcontractor, has not, within the three-year period preceding this RFP, been notified of any delinquent federal or state taxes in an amount that exceeds $3,000 for which the liability remains unsatisfied. Taxes are considered delinquent if (a) the tax liability has been fully determined, with no pending administrative or judicial appeals; and (b) a taxpayer has failed to pay the tax liability when full payment is due and required.

5. The subcontractor has not commenced a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law. The subcontractor has not had filed against it an involuntary petition under any bankruptcy, insolvency or similar law.

6. The Subcontractor certifies that it complies with the USTDA Nationality, Source, and Origin Requirements and shall continue to comply with such requirements throughout the duration of the USTDA-funded activity. The Subcontractor commits to notify USTDA, the Contractor, and the Grantee if it becomes aware of any change which might affect U.S. Firm’s ability to meet the USTDA Nationality, Source, and Origin Requirements.

The selected Subcontractor shall notify the U.S. Firm, Grantee and USTDA if any of the representations included in its proposal are no longer true and correct.

Subcontractor certifies that the information provided in this form is true and correct. Subcontractor understands and agrees that the U.S. Government may rely on the accuracy of this information in processing a request to participate in a USTDA-funded activity. If at any time USTDA has reason to believe that any person or entity has willfully and knowingly provided incorrect information or made false statements, USTDA may take action under applicable law. The undersigned represents and warrants that he/she has the requisite power and authority to sign on behalf of the Subcontractor. Name

Signature

Title

Full Legal Name of Subcontractor Date

A N N E X 7

GRANTEE NON-DISCLOSURE AGREEMENT

NON-DISCLOSURE AGREEMENT

___________________, a _________________________ (“______") located at __________________ and _______________, a ____________(together with its affiliates, “______”) located at___________________________, hereby agree as follows pursuant to this Non-Disclosure Agreement dated as of ____________:

1. In connection with discussions between __________ and ____ (the “Parties”) concerning a Trial period for evaluation purposes (the “Trial”), each of the Parties has requested that the other Party provide access to certain Confidential Information (as defined below). For purposes of this Agreement, the Party disclosing or providing access to Confidential Information shall be referred to as the “Disclosing Party” and the Party receiving Confidential Information shall be referred to as the “Receiving Party.”

2. As used in this Agreement, the term “Confidential Information” means and includes any and all oral and written information that has not previously been made available to the public, including, but not limited to, the following:

a. trade secrets concerning the business and affairs of the Disclosing Party, product specifications, concepts, market data, planning and financial information, know-how, inventions and ideas, concepts, software, equipment, designs, drawings, techniques, processes, systems, models, data, source code, object code, documentation, diagrams, flow charts, past, current and planned research and development, customer lists, current and anticipated customer requirements, price lists, business plans or opportunities, business strategies, marketing plans or opportunities, marketing strategies, future projects or products under consideration, procedures, information related to costs, prices, suppliers, vendors, customers and employees disclosed either directly or indirectly, in writing, orally or by drawings or inspection of equipment and software, and all other technical, business or other information which is considered proprietary and/or confidential by the Disclosing Party;

b. information concerning the business and affairs of the Disclosing Party (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training techniques and materials), however documented, that has been or may hereafter be provided or shown to the other Party by the Disclosing Party or the directors, officers, employees, agents, consultants, advisors, or other representatives including legal counsel, accountants or financial advisors (“Representatives”) of the Disclosing Party or is otherwise obtained from review of documents or property or discussions with the Disclosing Party’s Representatives by the Receiving Party or the Receiving Party’s Representatives (including current or prospective financing sources) or Representatives of the Receiving Party’s Representatives irrespective of the form of the communication, and also includes all notes, analyses, compilations, studies, summaries, and other material prepared by the Receiving Party or the Receiving Party’s Representatives containing or based, in whole or in part, on any information included in the foregoing. Any trade secrets of the Disclosing Party will also be entitled to all of the protections and benefits under any applicable law; and

c. any and all information concerning the Disclosing Party’s relationship with any Contacts.

3. The Receiving Party shall:

a. Restrict disclosure of the Confidential Information solely to those Representatives of the Receiving Party with a need to know and not disclose it to any to other individuals or entities.

b. Advise Representatives who receive the Confidential Information of the obligation of confidentiality hereunder and obtain suitable assurances from them that they will observe the confidentiality obligations imposed hereunder;

c. Not reproduce or copy any of the Confidential Information, in whole or in part, except as necessary to analyze said information effectively;

d. Use the Confidential Information only for the purpose of the trial; and

e. At the request of the Disclosing Party, return together with any copies thereof, the Confidential Information when no longer needed or when the trial is completed, whichever occurs first.

4. Notwithstanding anything to the contrary herein, the Receiving Party shall have no obligation to preserve the confidentiality of any information which:

f. Was previously known to such party free of any other obligation to keep it confidential, or

g. Is or becomes publicly available by other than unauthorized disclosure by the Receiving Party or its Representatives; or;

h. Is independently developed by such Party, or;

i. Is received from a third party whose disclosure to the Receiving Party or its Representatives would not violate any confidentiality obligation.

5. If the Receiving Party or any of the Receiving Party’s Representatives are requested or become legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil or criminal investigative demand, or similar process) or is required by a regulatory body to make any disclosure that is prohibited or otherwise constrained by this Agreement, the Receiving Party or such Representative, as the case may be, will provide the Disclosing Party with prompt notice of such request so that the Disclosing Party may seek at its sole expense an appropriate protective order or other appropriate remedy.

6. Each of the Parties hereby acknowledges and agrees that unauthorized violations of the non-disclosure provisions herein, even without intent to harm, could cause substantial and irreparable damage to the Disclosing Party or its Contacts, the degree of which might be

difficult to ascertain. Accordingly, each party agrees that Disclosing Party will have the right to obtain an immediate injunction enjoining any breach of this Agreement, as well as the right to pursue any and all other rights and remedies available at law for such a breach.

7. Nothing contained in this Agreement shall be construed as granting or conferring any rights by license or otherwise in any Confidential Information disclosed other than as described herein. The disclosure of Confidential Information in the manner provided for herein in no way obligates either Party to undertake any transaction or other business association with each other.

8. Neither Party hereto may assign, transfer or sell its rights under the Agreement, or delegate its obligations hereunder without the prior written consent of the other party.

9. If any provision of this agreement will be adjudged to be invalid or unenforceable by any court of competent jurisdiction, or by operation of any applicable law, it shall not affect the validity of any other provision hereof, and such other provisions shall remain in full force and effect.

10. No failure or delay by either party in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof, or failure to exercise, preclude any other or future exercise thereof.

11. This agreement shall be governed in accordance with the laws of the Republic of Panama.

12. This Agreement shall become effective on the date set forth below and shall continue until it terminates two (2) years following the date set forth below.

13. All Confidential Information is provided “As is” without any warranties, express, implied or otherwise, regarding its accuracy and completeness. Any representations regarding the Confidential Information, if any, will be contained in the documentation consummating the Transaction, if any.

Very truly yours,

[ ] By: _____________________________ Name: Title:

Accepted and agreed as of the date first set forth above:

[ ]

By: _____________________________ Name: Title:

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