 Good afternoon, ladies and gentlemen. My name is Pedro Rodriguez Almeida. I am the head of infrastructure and urban development industries at the World Economic Forum and I would like to welcome you all on behalf of the World Economic Forum to this press conference on the launch of our strategic infrastructure initiative report on operations and maintenance. World Economic Forum has been working in this topic for the past three years and we built a knowledge series on strategic infrastructure covering the three building blocks of project origination, project delivery and now operations and maintenance, particularly the volume that we are launching today has a lot to do with what goes on in the world. Existing infrastructure stock, in fact, can be optimized for its usability. It's not always wise to build new, if existing infrastructure can be refurbished and be put to operation with benefits to the end users and that substantially decreases the amount of new money that has to be injected either by governments or the private sector. It just makes business sense. It makes sense in terms of society to look at this type of operation and maintenance strategies on how you can optimize the existing utilization of assets, particularly the report that you have on your desks. It's titled, Steps to Operate and Maintain Infrastructure Effectively and Efficiently. It's a report that is done in collaboration with the Boston Consulting Group. It very much follows an approach with practical guidance to governments on how they can look at these challenges, but also as opportunities to look at their existing infrastructure and also to balance the need to invest in green fields or new infrastructure or, on the contrary, with infrastructure that is already in place that can be upgraded, refurbished or simply changed in terms of how you operate and service it on a daily basis. The report very much brings together simple ideas that can be properly digested not only for specialists but also for government officials and specialists in the public administration. It's not meant to be a detailed technical compendium of what are all the requirements, all the details of operation and maintenance but rather to focus on a number of strategies and these strategies, they can either be implementation strategies like maximize the utilization of an asset or enhance quality for users to name two or they can be enablement strategies, for example to ensure funding to build capabilities or to reform governance. The report itself has a number of case studies that were collected across the world. It covers mainly what we call economic infrastructure but it has also a number of examples on social infrastructure, on the best practices on how operation and maintenance can be included in social infrastructure. So without further ado on the report itself, you will have the press release and you have it with you. I would like to introduce the panel. We have Minister Roy of the Panama Canal Affairs on my extreme left. We have Rashad Kaldani, Executive Vice President of Emerging Markets, Kester Depwey-Parnia of Quebec in Canada. We have Lee McIntyre, Executive Chairman of CH2M Hill and myself, Pedro Rodrigo Zambaida from the World Economic Forum. I would like to ask Minister Roy to provide some initial remarks. He is of course familiar with the work that we produce. We have prepared a specific case study on the Panama Canal and I would very much invite you Minister Roy to share your insights. Thank you very much. It's a pleasure to be here and introducing this very fine technical report. It's been the product of many, many hours of work by many institutions. I think it's going to be a very fantastic piece of technical report for all the people involved in the process of maintenance. Just for the Panama Canal, I just want to mention briefly that maintenance is really one of our main jobs every day. This is a process that has been going on since 1914 when this waterway started. I want to mention a couple of things so you have an idea of the value of maintenance. The process of maintenance at the canal is very, very structured. It's not like we're going to go ahead and if something broke we're going to do maintenance on it. No, this is a process. It's all preventive maintenance, absolutely everything is preventive maintenance. It's a very rigorous progress and a very rigorous project. Now, for example, many people don't understand that when the canal, they forget, they're not aware that when the canal was built, the technique of reinforced concrete was just starting in the world. And also, electricity, AC electricity was just starting as a worldwide business. As a matter of fact, we had a very little company that this was their first big job, was called General Electric. They did the first, the Panama Canal was their first big job and they did a very good job certainly for many years. Now, the concrete that was used in the canal was not even 2,500 PSI strong and it has lasted a hundred years. And the reason is that we have been doing maintenance on it for a long time. Now the new concretes are specified very expensively to have all kinds of mixes, more cement, more additives, lots of things. But our original concrete, really, if you look at it, was a very poor concrete but very well maintained. So that's why I stress the fact that Panama Canal is mainly a maintenance operation. Now, also, we had the miter gates, you see the canal does not have, the new canal will have rolling gates that they will do like this. But the ones we have are called miter gates because they close at an angle. They have several reasons for it in those days. It will apply the pressure from the water and close them very well. So it has a lot of technical detail of why they did it that way. Now we're doing it differently for some other technical reasons. I'm not going to get into that but what I want to stress is that those gates lasted 85 years on rack and pinion levers. If you went there, the gear was, I don't know, maybe from that wall to you. That was the diameter. It was a huge wheel and with a very little one that was only acted upon by a 40 horsepower motor, electric motor and it was an incredible thing that lasted for 85 years. When it was broken, it was due to excessive and incredible maintenance. Now they have been changed for hydraulic systems. So I just want to close my remark saying that maintenance is key and I hope this report will give an insight of all the work that we have done and we can also learn a lot from the other participants in the forum. Thank you very much. Thank you minister Roy. I would like to ask Rashad Kaldani to give also his insights particularly from an investor side that has a large pension fund that is interested in infrastructure. Indeed Pedro. Thank you. I think this is very timely report because as I traveled around the region over the last four or five months I hear from country to country the huge needs for further investments in infrastructure and as Riley pointed out, there is a lot of benefits to be acquired from new infrastructure but also from maintaining existing infrastructure but this report focuses on the latter and I would like to bring up why from an investor such as CDPQ which has $200 billion under management and is looking for this asset class infrastructure why this is so important. We actually like to buy existing assets because they are relatively low risk. They provide current income but we are long term investors so we look for assets that last 10, 20, 30 years and obviously there the whole issue of operations and maintenance is critical. So we have already $8 billion in this class of infrastructure. We are now actively looking to expand on that in the emerging markets and I think this report is very timely in bringing out some very practical steps to keep the value up and to attract long term investors such as CDPQ and other institutional investors. Thank you Rashad. Lee, I would like to have also your insights on particularly as you are the executive chairman of a large design engineering and construction project management company very close also to what the canal is going to be today. Well, Mr. Roy's comments on the canal kind of sum it up. If you think about it, if they had not had maintenance, design life was probably 20, 30 years so they would have to build three or four canals. Think of the expenditure based there so it kind of sums up the value of this report is excellent. If there is anything more exciting than infrastructure it is O and M. That was a joke by the way. We have learned at this conference that long term financing and local currencies is the issue for Latin America. Trillion dollar shortfall at least. Well, if you learn from this report that actually a big bulk of that, part of that shortfall could be taken care of by sustainability, resource, asset allocation and O and M and existing projects. To me what operation of maintenance is, it's resource management, it's asset management and it's data. For example, there's a lot of projects around the world now that are redoing pipelines, gas pipelines because people have forgotten where they're built. They were built 60 years ago, they've held up well on their own for 60 years, but now they're starting to leak. During that time since we lost the data, don't have the data, houses have been built over the gas lines. So it's created a whole new issue. If the projects had been, had a plan for asset management and resource management, a lot of cost could have been eliminated. So this report is just excellent. Thank you, Lee. I would like now to open the press conference for the journalists that are here in the room. I would like you to please clearly identify yourself and to stand up and say your name and also your affiliation. Also please make one question at a time. Make it clear. And also if you have a particular preference in the panel to answer that question also indicate and I will moderate that answer together with the panelists. Please take the mic. Mariela Palacios from Capital Financiero. The question is for Mr. Roy. We would like to know the cost of maintenance for the Panama metro system if you have estimates already. The maintenance of the metro, which we shall inaugurate on Saturday. It's our first line here in Panama. The total cost and we will talk first about total cost, the operational cost and maintenance, power, energy, administrative costs. It'll be about $50 million by law when we drafted the law for the metro. The first thing we did was to establish a provision stating that at least 20% of revenue shall be allocated to maintenance. Therefore, that contract for the maintenance work will run. I have to check the exact final numbers because we have several maintenance contracts, but the largest one is the contract for the actual moving equipment, the trains, the equipment, etc. That contract is probably, it's probably around $9 million. The others are smaller contracts for cleaning exterminator costs, just smaller contracts for the rest of the operation. But the largest one is for the moving equipment. We have very new sophisticated equipment and we shall provide good maintenance for it. Thank you. I have a question for Minister Roy. This is Henry Greenes from Oxford Business Group. Minister Roy, line three. There are two options on the table. Monorail and light train, like line one and two. There are also two opinions, an engineering opinion and a financial opinion. Under your view, what is the best option for line three? A monorail or light train? Thank you. Yeah, this is a very interesting question because we're going to go ahead with the monorail for line three. And there are many specific reasons for this. The monorail has the capacity to go up a steeper slope. Okay? We have two problems on the monorail is going to the west. That means going over the Panama Canal. So we need to build a new bridge and then we need to go and negotiate all the hills that we have some hills on the other side. And if we did not use a monorail, we would have had to build lots of tunnels, okay? So when we made the calculations in the total cost and the benefits, the monorail came on top. There are new monorails because some people think in their mind that the monorails are like a Disney World thing. Yeah, they do. As a matter of fact, I did too at the beginning. But no such a thing. There are new monorails with lots of capacity and they have been used for some years now in Tokyo and in other places. Now they're built one in Sao Paulo, Brazil. So well, we had the problem of the hills and also we had the problem that we're going to put the monorail station on top of the metro station. So we can have a vertical transfer. Okay? So now when the monorail goes out from Albrook, if you know Panama, it is in Albrook, we have an airport that we have to take care of. So the monorail cannot go the train or whatever we would have put there, cannot start slowly going up because then you meet the approximation cone of the airport. So we had to go low at the beginning and then suddenly rise up and the only equipment that could do that fast enough was the monorail. So those were the two reasons that we use a monorail instead of a light train. Please take your mic. Buenos. Good afternoon, Mr. I'm William Espinosa, AAP Business Magazine. What's the status of the Panama Canal project right now and the final investment? Line one, no, the Panama Canal. Changing subjects? Okay, there are several contracts. Let me explain this. There's a contract for dredging. Many contracts for dredging. The dredging has been done by our big companies, dredgers in the world, Boscalis, Jan Denul, international dredging, dredging international, et cetera. So that's one part of the thing is the dredging. The other ones are excavations in dry land. Okay, so there are other companies that have that. Then we have the Pacific Access Channel, which is another contract. And then we have the big contract, which is the LOX contract. Okay, now the LOX contract, which is the one that has been in the news, it is a $3.2 billion contract. And on your question of financing, one of the issues that we have been discussing here are the advances that we gave to the contractor. First of all, the first $600 million of advances, it is written in the contract. So there is nothing to change there. It's $600 million. And what is that money for? It's for all the equipment that they had to buy at the beginning. They had to buy immense equipment to manufacture concrete, okay? That's one of them, trucks, et cetera, et cetera, et cetera. So a lot of this money is for equipment, maybe 400 or close to 500 million or the 600 million was used for all the equipment that was needed. And then the rest was used for what is called mobilization. They have to install all these things, et cetera. Now, on top of the 600, we have given them 184 more. So that's $784 million, that's the one that we have advanced up to now. And the discussion that we had before with the contractor was that contractors felt that they had rights to claim X number of dollars for this, for that, for that, okay? Our only position, and we maintained it, and it was the position that stuck is the, we told them you should go through the procedure. And the procedure is clearly spelled in the contract. They wanted to do a deal outside of the contract and say, okay, let's make a deal for X million. And we said, zero, no, we don't go for that. So if you wanna do, if you wanna get money, you sure can get money if you convince the dispute adjudication board to give you that money or then later in arbitration. So at the end of about two, three months of going back and forth, you all read about it in the newspapers. I think that we finally convinced the contractors that first of all, we were acting in good faith and that we were not trying to short change them. And that the way to go was by the rules and that if they think that they have the right and that they are right on what they are asking for, they'll be able to get it there. And then we made some other deal here, which is very key. And this was the deal maker for the finish of the conflict. It was at the insurance company made available through backing some European banks, $400 million, which is very unusual. I have spoken to many people in the industry and the insurance industry and practically the Zurich America, that's the name of the company, Zurich America has done something for us very good. And in the international scene, kind of unusual because they practically took the risk already for something that hasn't happened. I mean, that bond is in case the contractor goes broke and the job start stops, but they went ahead and helped us making available this money for the contractors now so they can finish the job. So on top of that, then we gave them $100 million more and they put a hundred million of their own. So we got $600 million of fresh money last week. So they have enough money already to go ahead and we still owe them a lot. So I think there is about $1.6 billion at this moment, $1.5 billion at this moment that will be disbursed during the next year and a half or so until the job is finished on supposedly December 31st, 2015. We'll probably, depending on X or Y, if they comply with that, then we can give them a little extension to February 2016 without it being the longest and they want to do it really for 215 because they get other awards within the deals that we have made. The deal with me is called the final MOU and the MOU is being translated into Spanish because lots of people here in Panama are requesting to have a copy of the MOU. So there have been, I think it should be translated at this moment already and it will be made available to the public maybe next week or so. Please. Buenas tardes. Good afternoon. My name is Adolfo Berrios from La Estrella. My question is for Minister Roe. The administrator of the canal, Mr. Jorge Quijano, already announced that Evergreen withdrew one of their services from the canal. What services were withdrawn and is there another shipping company that is announcing changes? The situation is the following. It's very simple. Due to the fact that the canal is not ready, the expansion, the new expansion is not ready, we have lost business that we had up to this point and they are leaving and they're leaving for the Suez Canal and what's the reason behind this? We are seeing more that there are two things influencing this, the price of oil, which is the number one variable in the operating costs for a vessel, fuel costs for many. The other is also that the vessels that are too large that at this moment cannot pass through the Panama Canal, they're the most efficient ones. So therefore they have great efficiency when you divide the quantity of oil used by the number of containers, you have to divide the cost by 4,000 some containers, but if you divide it by the Suez Canal, it might be a 9,000, 14,000 maximum and there's some new vessels that were never expected to traverse through Panama that have approximately 18,000 containers. So these vessels have great efficiency, the latest technology, engine technology and what they're doing now because they cannot use the Panama Canal is that they're using the Suez Canal. Now, what's going on with this? Well, it's taking them longer for merchandise to arrive to its owners and I'm talking Walmart, Home Depot, all these companies that use the shipping lines for their supply. For example, a trip from China, they go all around and use a Suez Canal, they traverse the entire Mediterranean, the Atlantic, that takes them about 12 days more than using the Panama Canal, but the fuel cost is so favorable and because the shipping lines are not the ones that are paying for the different costs, the ones that are bearing the costs are the Walmart, Home Depot companies that are paying for inventory that they will have in their warehouses for 12 more days and shipping companies said, well, this is the way it is, there's no other way and it's a phenomenon that we're seeing and we hope it's temporary until the canal is finished but this is why it's so critical to finish the work soon. Back. Hola, buenas tardes, Blanca. Good afternoon, Blanca Berseril with Bloomberg Financial, also for Minister Roy. Do you have data on how much is being lost because the Panama Canal is not ready? Do you know how much companies are losing? Well, the truth is I am not, I'm not a data banker. There is such a number, yes, of course. It's less than what people think it is. But please don't quote me on this number. But I think it's around $50 million but we shall confirm it with the Panama Canal official so they can provide us the exact number. It's not a huge number but it's not a small amount either so we really do not want to lose business to the Suez Canal and we will try to speed up the process as much as possible. We have two large competitors, the U.S. Land Bridge and the Suez Canal and what do we mean by land bridge? The vessel comes from China, arrives at the U.S. West Coast, LA and Long Beach ports, then they transfer it to the railways or they use trucks and they are transported this way to New York. This land bridge is a little bit quicker than using the Panama Canal and then going upward. It's about five days quicker but it's more expensive. So that's why we take a lot of business away from that route when we really began to position the canal as a commercial company. Now they are also making their own investments and things are becoming more equal. Those are great competitors but right now the Suez Canal journey is the one that's taking away business. A land bridge in the U.S. is used mostly for a time sensitive cargo, a time sensitive freight, an iPad shipment, that has to arrive to its market quickly so that freight uses the U.S. land bridge. Other goods are able to take longer and they can use the Panama Canal without problem. Taking into account that we have a representative of a big pension fund, these are the guys that really have the capability to mobilize capital into physical assets. So don't miss the opportunity to ask Rashad Kaldani also questions about that and again, nothing of this happens and although this type of assets like the expansion of Panama Canal don't come that often, the private sector that makes this happen is here and they're also involved in a number of other projects. So don't miss the opportunity to ask as well how this happens and what they are doing to make these projects very successful. I'm enjoying Mr. and Minister Roy. I'm learning a lot. Fascinating story. Please microphone here. Hi, Tiffany Grabsky, SNL Financial. Question for anyone really because we've been talking a lot in Latin America specifically here in Panama being the hub of the Americas about integration of infrastructure in all of Latin America. So I wanted to know a bit your opinion of what the opportunities are for integration in Latin America, what's being missed and what maybe we'll see shortly. Rashad, do you want to take that one? Well, in every region of the world integration provides huge benefits and I think that's the case in Latin America as it is for instance in Africa. I also know well in Asia, two regions that we're focusing on a lot. Here there's tremendous, you see it in the logistic sector. Huge advantages to what Panama is doing is going to benefit all the countries in the Caribbean region. Lots of ports are coming up because of what Panama is doing here. You see it also in the gas sector, for instance, a lot more trading, a lot more pipelines being discussed that go across countries. I think the energy sector as a whole, which is something we're looking at a lot, it lends itself to a lot of integration. So yes, I do think there's tremendous scope in this region. There's integrated projects already in South America. Integration lends itself to a place with dense population like Europe. There's a lot of integrated infrastructure, energy, data management, transportation, rail, everything in Europe is the population is at least 20 times more dense than South America or North America. So it does lend itself a little bit more when the countries are heavily populated. But there's examples all the time of integration. We have time for one last question. This one in the back. This one. Please hear. My name is Patricia Moore with American Airlines Nexus Magazine. I'm a question for Ghost for Mr. McIntyre. And it is about the integration of NAFTA, which we know that is now turning 20 years. Even though they don't have that dense population, what do you think about the results? Well, I'm a big NAFTA fan. Of course, I'm a big free trade fan. So I think NAFTA's been a huge success for, but it's seen friction. If you see the Keystone Pipeline issue that's coming from Canada to build a pipeline across the US, so you see friction, you see politics, you see things enter. But I think it's been a very powerful economic block, especially in energy now, with all three countries in NAFTA being energy rich. If we get our act together, it could be very, trading blocks are being formed all over the world right now. I mean, there's three treaties that are being discussed out there that would include two thirds of the countries in the world. If they are approved, they include the United States and all three of those trading blocks. So I think NAFTA was a good move. Not everybody likes NAFTA, but as far as as a business person, it's been quite successful and has more potential. It would get out of our own way. Thank you very much, ladies and gentlemen. Thank you very much. I'm Mr. Roy Rashad Kaldanian, Lee McIntyre for the press conference. Good afternoon. Thank you. Thank you.