Panama Ports Defends its Concession with the State and Assures that it has Paid $668 Million 

After the Comptroller General of the Republic reported non-compliance with the concession contract for the ports of Balboa and Cristóbal, Panama Ports Company, SA (PPC) rejected the accusations and defended that during the term of the concession it has paid the State $668 million, far exceeding the contributions of any other port operator in the country.  PPC reacted in this way after Comptroller General Anel Flores, pictured below, confirmed, following an audit, that there was a potential financial loss of $1.2 billion against the Panamanian state. 

This has led the Attorney General’s Office to open an ex officio investigation into the matter, for the alleged commission of a crime against public administration and other crimes against the State.  According to PPC, any statement regarding what PPC should have paid under the concession contract signed in 1997 must take into account the respective addenda validly signed and approved by law.  He emphasized that stating the opposite, as has occurred, not only distorts the reality of the legal relationship between PPC and the Panamanian State under the concession contract and its addenda, but also contradicts the Panamanian State’s own actions over the years. “To maintain, therefore, that PPC has stopped paying the Panamanian State approximately $1.2 billion is absolutely contrary to reality,” the port company clarified.  He added that “over the past 28 years, PPC has paid the Panamanian government $126 million in dividends. Consequently, the government receives these dividend payments solely from PPC and not from other port operators.”

Exemptions and Reports

PPC reported that even all the tax exemptions granted under the concession contract, which was approved by Law 5 of January 16, 1997 and its respective addenda, are precisely the same tax exemptions granted to other port operators in Panama.  He recalled that the Comptroller General’s Office concluded in its 2020 audit report that PPC is in substantial compliance with the clauses and obligations of the concession contract.  In addition, the Panama Maritime Authority certified in 2021 that PPC is in compliance with its obligations under the concession contract.  PPC argued that “the contract extension is valid, in force, and meets all legal requirements.

Payments and Investments

He noted that since 2005, when they participated in the contract addendum, they committed to investing more than $1 billion and, additionally, to making a payment of $102 million for the infrastructure they had inherited when they assumed the concession of the ports of Balboa and Cristóbal.  Since that time, according to PPC, they have made significant investments that exceed $1,695 million, surpassing not only the $50 million investment required under the original concession contract, but even the $1,000 million agreed upon under the addendum, as confirmed by the Comptroller General of the Republic in 2020 after a thorough audit process that lasted approximately four months. 

Two Auditors, Two versions: Opposing Opinions On the Audit of the PPC Contract:  Time will Tell

PPC emphasized that “Over the past 28 years, the Panamanian government has received dividend payments of $126 million. Consequently, the government receives these dividend payments solely from the company itself, not from other port operators.”  He mentioned that according to the Comptroller General’s Office, the company has contributed more than $5.9 billion to the national economy through added value, indirect effects, payments to the State, and investments made.  He also emphasized that they have complied with the container movement payments required by the Panama Maritime Authority, at the same rate applicable to all port operators. He warned that “at no time have these payments been waived.”