Panama Ports Face Uncertainty as Contract Dispute Unfolds

PANAMA CITY, July 31 (Reuters) – Public-private partnerships could take over two key ports near the Panama Canal if courts invalidate a contract with Hong Kong-based CK Hutchison to operate them, Panama’s President Jose Raul Mulino said on Thursday.

CK Hutchison holds a 90% stake in the local Panama Ports Company, which had a 25-year concession to operate the Balboa and Cristobal ports, located at both ends of the canal, renewed in 2021.

The contract has been at the center of a dispute since U.S. President Donald Trump this year threatened to take over the waterway due to China’s influence over Panama’s maritime industry. CK Hutchison is trying to sell its stake in the Panamanian company as part of a massive global deal.

Two suits were filed with the Supreme Court this week by Panama’s Comptroller General’s office, aiming to declare the agreement unconstitutional and to nullify the contract on the basis the renewal did not follow required legal steps, including the Comptroller’s greenlight.

“I do not at the moment see the continuation of the Panama Ports contract, amended or not,” Mulino told a press conference. “We will wait for the verdict,” Mulino added, referring to the lawsuits.

The comptroller has openly criticized the contract over alleged irregularities by the previous government and insufficient revenue to Panama from the deal, but the full results of a recent audit by his office have not been revealed.

The legal challenges the contract is facing in Panama are adding troubles to a diplomatically sensitive plan from a consortium led by U.S. asset manager BlackRock to buy a large portion of CK Hutchison’s global ports business, a possible deal that has been celebrated by Washington but criticized in China.

The deal has become increasingly politicized amid a U.S.-China trade war. Beijing argues it has significant national interests in the transaction and the proposed deal would be a betrayal of the country.

Panama’s government is also seeing partnerships with the state as a solution for the operation of a key copper mine previously operated by Canada’s First Quantum Minerals, whose contract was declared unconstitutional by the Supreme Court in 2023.

“The idea is still a draft, covering the ports and the mine through partnerships with the state,” Mulino said.

Reporting by Elida Moreno and Marianna Parraga; Writing by Sarah Morland; Editing by Brendan O’Boyle

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