MR'S ADVISORY TO SHIPPING No. A-01-2002
SUBJECT: MONTHLY CANAL OPERATIONS SUMMARY - DECEMBER 2001

* Identifies the locks requiring a major outage of one of its two lanes for dry chamber inspection, miter gate repairs, tow track work or other major maintenance/improvement projects. Advantage may be taken of this requirement to perform simultaneous single lane outages for additional maintenance at other locks.

3. This advisory will be canceled for record purposes on January 31, 2002.

ITEMS OF INTEREST FOR THE SHIPPING COMMUNITY CANAL PERFORMANCE
In December, oceangoing transits totaled 987 or a daily average of 31.8. Transits by wide-beam vessels, 30.48 meters (100 feet) and over, totaled 370, or 37.0 percent of all oceangoing transits. The average Canal Waters Time (CWT) was 21.8 hours.

NEW MARKETING MANAGER
Mr. Oscar Bazαn has been appointed Manager of the Canal΄s Marketing Division. Mr. Bazαn brings to the Canal more than 20 years of experience in sales and marketing in the shipping and transportation industry. Most recently, he served as Sales Manager of Maersk-Sealand offices in Panama, and he has held similar positions with Sea-Land Service, Inc., and Crowley American Transport. Mr. Bazαn obtained a degree in Industrial Engineering and Business Administration from the University of Panama. He completed post-graduate studies on Strategic Planning and holds a Masters Degree in Marketing and Maritime Business from the University of Science and Technology, (ULACIT) Panama. Mr. Bazαn΄s appointment is in line with the Canal΄s efforts to strengthen its management team and knowledge base of the maritime industry. The recent reorganization of the Department of Corporate Planning and Marketing, brought about the creation of a new Strategic Services Division and the consolidation of the Marketing Division, which now includes the office of Customer Relations, Pricing and Tolls, Dry Bulks, Liquid Bulks, Liner Services, Other Specialized Services, and New Business Development.

CONGRATULATIONS TO THE PANAMA CANAL AUTHORITY ADVISORY BOARD MEMBERS
His Excellency, Mr. William O'Neil, Secretary General of the International Maritime Organization was elected on November 22, 2001, to head the IMO for two more years. Mr. William O'Neil is also the Chairman of the Panama Canal Authority Advisory Board. He was appointed a member on December 14, 1999, and has since been Chairman of the Board. Mr. Gustavo Cisneros, a new and valuable member of the Advisory Board, was featured in Forbes Global, the English language international edition of Forbes in its November 26, 2001, issue. The Cisneros Group has joint ventures with AOL Latin America and Direct TV and his Univision is the fastest growing television network in the United States. The article highlights the immense potential of Ibero-America, including the enormous growth of the U.S. Hispanic market. The Cisneros Group ranked 38th in a list of the 50 largest private companies outside the U.S. and is the only Latin American company to be included on the list. The Panama Canal Authority Advisory Board serves as a consultant for the Canal enterprise with their main responsibility to provide guidance and recommendations to the Board of Directors. The members of this Board are recognized professionals with broad experience in the business world and the Panama Canal, in particular. With the assistance of the Advisory Board, the Canal has maintained a much closer contact with the representatives of the shipping industry. Throughout the past two years, the Board has provided valuable guidance and recommendations to the Panama Canal to assist us in our permanent quest for a more efficient, competitive and safe waterway.

DUTIES OF THE ACP BOARD OF DIRECTORS
The recent ratification by the Legislative Assembly of the appointments made by the Executive Branch of the new members to the Panama Canal Authority (ACP) Board of Directors provides an opportunity to highlight the importance of entity, which is responsible for overseeing Panama Canal policies. In accordance with Article 13 of the Panama Canal Authority Organic Law, the ACP Board of Directors shall be composed of 11 directors, nine of who shall be "appointed by the President of the Republic, with the consent of the Cabinet Council, and ratified by an absolute majority of the members of the Legislative Assembly. " The remaining two shall be designated, one by the Legislative Branch, who may be freely appointed or removed thereby, and the other the President of the Republic, who shall chair the Board of Directors and shall have the rank of Minister of State for Canal Affairs. The alternate designation of new directors during different presidential terms seeks to guarantee the ACP's independence from partisan polities. Their terms, of nine years each, are conveniently set to accomplish medium and long-term policies. Board members may only be removed from their posts for the reasons set forth in Article 20 of this Law, which include committing any criminal offense or offense against the Public Administration, or proven physical, mental or administrative incompetence, " by decision of the President of the Republic, with the consent of the Cabinet Council and the Legislative Assembly." In order to become ACP director (Art. 14), candidates 1) " must be Panamanian citizens of acknowledged integrity; 2) must not be related, at the time of appointment, to any of the Directors, up to within the fourth degree of consanguinity or second of affinity; and must hold a university degree or possess equivalent training. "

The Directors, as such, may not receive remuneration or representational expenses, "but they may receive a per diem for their attendance to the meetings of the Board of Directors " (Art. 15). All decisions and resolutions of the Board of Directors shall be adopted by the favorable vote of the absolute majority of its members. The powers of the Board of Directors include (Art.18) appointing and removing the Administrator, the Deputy Administrator, and the Inspector General, and establishing their salaries and other payments; setting the tolls, rates, and fees for use of the Canal and related services, subject to final approval of the Cabinet Council; approving the necessary or appropriate regulations for the proper operation, and modernization of the Canal, including the regulations and establish. Among other matters, criteria and procedures for selection and promotion and the wage scale and monetary benefits for officials, An important aspect that was considered while legislating on this issue, was the empowerment of the Board of Directors to seek advise from " Panamanian and foreign citizens " y virtue of " the international public service provided by the Canal. " Therefore, the Authority may designate individuals to make up this Advisory Board, taking into account their past experience and areas of expertise (Art. 19).

TALKS GO AHEAD ON PANAMA RUSSIA MARITIME AGREEMENT
The republics of Russia and Panama could reach an agreement this year ending discrimination against the Panama merchant fleet. This was revealed in a report last weekend following a series of meetings between officials of both governments. Last Wednesday the Russian representative in Panama met with the administrator of the Panama Maritime Authority, Jerry Salazar, to extend the negotiations being carried out by both countries and a possible visit to Panama by Russian dignitaries in February. The Panamanian Authorities believe it is necessary to arrive at an agreement to abolish the higher fees on ships flying the flag of Panama that call at Russian ports. It is hoped that the negotiations can be finalized in the short term and an agreement bring great benefits to both countries. The convention between the two countries (Panama and Russia) would eliminate the payment of high fees on ships arriving in Russian ports, as has been happening up until now, said the government source. Restrictions on Panama-flag ships in Russia based on the fact that Panama never had diplomatic relations with the former Union of Socialist Soviet Republics, but with the talks now taking place between the officials of both governments it is hoped to put and end to the conflict. A source of the Panama Maritime Authority confirmed that the talks are underway to end the discrimination against Panamanian ships and said that Panama had already sent a delegation to Russia to widen the talks, that are now well advanced. The source pointed out that representatives of the Russian Ship Owner's Union, specialist from the Russian Maritime Navigation Security Department, representatives of personnel and the maritime transport teaching service of the Russian Transport and Maritime Fleet Ministry have all taken part in these meetings.

BILL TO CREATE INCENTIVES TO MARITIME PASSENGER TRANSPORTATION
A bill contemplating the creation of fiscal incentives to companies engaged in public maritime passenger transportation and tourism was approved, on first debate, by the Communications and Transportation Commission of the Legislative Assembly. According to Article 28 of the proposal, the Government will exonerate every two years import taxes on ships and equipment necessary for safety and adequate transportation of passengers that may be required to obtain navigational permits or licenses. Import duties on parts and accessories of ships needed for operations will be exonerated. Also, companies meeting certain conditions will be exonerated from paying income tax for five years. Those companies should have some of the following ships: a cruise ship with a minimum capacity of 350 passengers, two cruise ships with minimum capacity of 100 passengers, four yachts with a minimum capacity of eight passengers, four sailboats with a minimum capacity of eight passengers, eight launches with a minimum capacity of eight passengers and 15 aquatic motors. Under the bill, those companies adhering to provisions of Article 28 would have five additional years of income tax exoneration if the total fleet of ship is renovated within four years of operations. Article 30 establishes that cruise ships disembarking a minimum of 40,000 tourist per year in Panama, the beginning of the year counted on the date of the first disembarkation, the state would provide the ship-owners an incentive of five dollars tourist.

The objectives of this bill, that has not been considered on second debate, include establishing a national policy on matters of developing public maritime passenger transportation to achieve greater efficiency in planing, coordination, operation and nationalization of different modes of public maritime passenger transportation as well as an adequate balance between the needs of users and the service provided by others and the state. Finally, this bill seeks to guarantee, and efficient comfortable, economical and responsible service of paid maritime passenger transportation establishing routes, hours and rates according to the service mode.

AVERAGE BUNKER PRICES PANAMA - week 03
This information is the range of the prices for the bunker products at the Panama Market by some of the main suppliers: