PANAMA CANAL COMPANY CAPITAL OUTLAY Obligations programmed in 1975 for Company capital projects total $21,300,000. Of this amount, $11,489,000 is programmed for projects in the Transit Operations functional area. All of the capital work accomplished will be financed from resources available to the Company. Detailed descriptions of each project in the 1975 Company capital outlay program are provided in the booklet titled, Justification of Programs and Estimates for the Fiscal Year Ending June 30, 1975, at Tab 3c. I will comment only on the more significant projects in the budget year program. Installation of sewage pollution controls. Total project estimate: $1,370,000; obligations programmed in 1975: $180,000. (Page 76 of the Justifications.) The program for 1975 will provide for the purchase of three vacuum tank trailers of 4,000 gallon capacity; the purchase of two tractors to transport the trailers; and the beginning of alteration work on existing sewage discharge facilities located at Company piers. This initial obligation of $180,000 will accomplish 13% of the total project, leaving $1,190,000 for subsequent years. Towboat docking facility, Atlantic. Total project estimate: $200,000; obligations programmed in 1975; $200,000. (Page 76 of the Justifications.) This project will provide a new, safer, and more useful mooring facility for 5 tugboats in a location where an existing adjacent building can be used as a shore repair and maintenance station. Modernization of the Marine Traffic Control System. Total project estimate: $5,000,000; obligations programmed in 1975: $1,394,000. (Page 78 of the Justifications.) The project is to construct a new Marine Traffic Control Center, including installation of a computer-assisted system which will collect, store, and display marine traffic control data. This is part of a continuing effort to improve efficiency of transit control operations and to better serve the requirements imposed by the increasing number and size of ships transiting the Canal. The 1975 obligation program brings this project to within $350,000 of completion. Improve wingwall knuckle fendering system of all locks. Total project estimate: $2,141,000; obligations programmed for 1975; $200,000. (Page 78 of the Justifications.) This is part of a long range program to improve the fendering system of all locks. The project involves installation of specially fabricated pneumatic fender-bumper devices which can better withstand the impact of ships' hulls. The increasing size of vessels transiting the Canal has reduced the margin of safety afforded by the existing fendering system. The new fendering system will provide a degree of impact absorption commensurate with the increased size of the transiting vessels. The 1975 obligation will bring the overall project to 17% of completion with $1,780,000 remaining for subsequent years. Replace and add tugboats. Total project estimate: $7,010,000; obligations programmed in 1975: $1,270,000. (Page 80 of the Justifications.) This project is a part of the Company's overall program for the continuation of an adequate tugboat fleet. The 1975 obligation is for acquisition of one new tug. Replace dipper dredge US PARAISO. Total project estimate: $5,400,000; obligations programmed in 1975: $5,100,000. (Page 81 of the Justifications.) The continued utilization of this steam-powered dipper dredge is uneconomical in terms of operating and maintenance costs. The PARAISO was constructed in 1914 and is far beyond its economic useful life term of 50 years. Replacement by a new diesel-electric dipper dredge will result in direct labor savings alone of $250,000 annually, as well as eliminate increasingly frequent requirements for overhaul and rebuilding of major dredge components. The 1975 obligation program brings this project to within $200,000 of completion. Improvements to oil handling facilities. Total project estimate: $12,769,000: obligations programmed in 1975: $1,500,000 (Page 83 of the Justifications.) The obligation programmed for 1975 is part of a recurring project to improve the efficiency of the Company's oil handling facilities. The existing marine bunkering system is old, inefficient in operation, and in poor material condition, making it a major contributor to the oil pollution problem. It is planned to replace various pumps and boilers, and approximately 2,000 feet of marine diesel oil line, in 1975, along with the relocation of certain lines. There remains $10,500,000 in this recurring project for obligation in future years. Improve container storage facilities. Total project estimate: $500,000: obligations programmed in 1975: $250,000. (Page 84 of the Justifications.) This is the second and final $250,000 increment of a project which provides for development of a consolidated container storage area at the Pacific Terminal port of Balboa. Sea-Land Service, Inc., has provided a large gantry crane which the Canal Company operates, at dock 7, Balboa, to accommodate their increased containerized shipping activites. The growth in container volume has now reached the point where such specialized equipment and a consolidated storage area are necessary. The overall plan for the consolidated container storage area is to develop, incrementally, an 8-10 acre area as workload volume dictates. The completed facility will have a totally surfaced area, fencing, lighting and power outlets for refrigeration requirements. Replacement and modernization of quarters, Total project estimate: $15,837,000; obligations programmed in 1975: $1,975,000. (Pages 85-86 of the Justifications.) Work to be accomplished in 1975 includes the programmed replacement of sub-standard housing; rehabilitation of certain marginal quarters; and routine re-roofing, re-siding, as well as other improvements to existing quarters. Expenditures in this category are recouped from occupants through rental rates. This is a continuing project. Obligations through 1975 will complete 59% of the total project leaving $6,455,000 to be obligated in future years. Install 22 Megawatt gas turbine generating unit. Total program estimate: $4,000,000; obligations programmed in 1975: $3,200,000, (Page 90 of the Justifications.) This is a nonrecurring project needed to meet the projected power requirements in the Canal Zone. The 22 megawatt gas turbine unit is considered the most economical and expeditious means of raising our generating capacity to the required level. Construction will begin in 1975 with on-line operation scheduled for mid-fiscal year 1976. The 1975 obligations will complete all but $700,000 of this project. Water system improvements. Total project estimate: $3,594,000; obligations programmed in 1975: $1,590,000. (Page 91 of the Justifications.) Obligation of the $1,590,000 programmed for 1975 will accomplish all but $175,000 of the total project. Work to be done in 1975 will increase the sedimentation capacity of filter plants; provide additional and replacement chlorination equipment; and install remote control and telemetry equipment. CANAL ZONE GOVERNMENT OPERATIONS The Canal Zone Government Operating Expense appropriation request totals $63,000,000 for 1975. This amount is an increase of $2,823,000 in funded costs over the amount anticipated for 1974. Administratively uncontrollable cost escalation, including wages, account for $2,027,000, or approximately 72% of this increase. The total amount of this appropriation, to the extent expended, will be repaid into the U.S. Treasury on a current basis through user charges for services rendered and reimbursement by the Panama Canal Company for the remaining met cost. The principal reasons for the increase in funded costs for 1975 over 1974 are: Statutory wage and salary increases, $1,050,000; the impact of cost escalation in Panama Canal Company activities on services provided the Canal Zone Government, $518,000; and escalation in the cost of employee statutory benefits, and supplies and materials, $459,000. The Canal Zone Government is providing aircraft fire crash/rescue service to the U.S. Army on a reimbursable basis beginning in 1975. The costs associated with this Interservice Support Agreement, although fully recoverable, reflect a workload increase of $250,000 in funded operating costs for 1975. The remaining increases for training police personnel in narcotics control, cost for accreditation of U.S. secondary schools in the Canal Zone, and the need to correct staffing deficiencies in Canal Zone Hospitals and Clinics through fuller occupancy of authorized positions, are partly offset by decreases for a net overall increase of $232,000. CANAL ZONE GOVERNMENT CAPITAL OUTLAY The capital outlay appropriation request for the Canal Zone Government for 1975 totals $6,500,000. The program for 1975 covers recurring projects only. Funds appropriated to the Canal Zone Government for capital acquisitions are amortized, over the life of the asset acquired, by way of depreciation charges to the appropriate Canal Zone Government operating accounts. The operating costs, in turn, are recovered by the U.S. Treasury through user charges for services or from the Panama Canal Company for the remaining net cost of the Canal Zone Government operations. The principal projects in the 1975 Canal Zone Government capital appropriation request are: Road and street replacements, $856,000; improvements to educational facilities, $803,000; and improvements and rehabilitations to health facilities, $3,654,000. (Page a. Road and street replacements: 1975 appropriation, $856,000. 20 of the Justifications.) The principal item in this project is the widening of Gaillard Highway along the heavily traveled segment between Pier Street and Diablo Road. The remaining items include concrete replacement of certain asphalt pavements, and miscellaneous improvements and replacements of traffic signs and signal devices, passing lanes and pavement extensions. b. Improvements and replacements to educational facilities: 1975 appropriation, $803,000. (Page 18 of the Justifications.) There are over 80 structures in the school system of the Canal Zone. Funds are required for myriad sinor requirements, many of which are unforeseeable. Included in this project are funds for air-conditioning improvements at the Curundu Junior High School ($350,000); funds for paving sidewalks, reroofing, storage sheds, and other minor alterations and improvements ($60,000); and funds for previously approved items in the 1974 budget ($393,000) which were reprogrammed to 1975 to partially accomsodate an appropriation reduction in 1974. c. Correction of structural deficiencies in the main building at Gorgas Hospital discovered as a result of the 1971 earthquake: 1975 appropriation $1,650,000. (Page 22 of the Justifications.) This project will provide external reinforcement of the building by way of a buttress to control movement of the building during earthquakes and minimize damage. 32-880 (Pt. 4) 0-74 -- 52 d. Correction of fire protection deficiencies present in Canal Zone general hospitals: 1975 appropriation $1,090,000. (Page 22 of the Justifications.) This work is a continuation of the work begun in 1974 to remedy these deficiencies. The original architecture and engineering of these buildings does not provide "minimum levels" of safety for patients and visitors consistent with standards established by the National Fire Protection Association Life Cycle Code. These standards have been applied by the Occupational Safety and Health Act of 1970 and are applicable to Canal Zone hospitals. PROPOSED TOCUMEN-CHORRERA HIGHWAY The Republic of Panama has solicited proposals from traffic consultant firms in the United States for a feasibility study of a Canal crossing that will connect the Chorrera-Arraijan highway with the Panama-Tocumen highway. The connecting highway is contemplated as a by-pass of Panama City with a bridge crossing the Canal just north of the Miraflores Locks. The cost of the feasibility study within the Canal Zone has not yet been determined. However, funds in the amount of $197,000 have been provided in the Government Capital Budget for 1975 for preliminary work on this project. The Canal Zone Government has as yet expressed no preference in the designation of a canal crossing site. The Government has agreed to provide readily available data to all interested consultants; to accomplish limited field investigations within the Canal Zone if such are desired; and to generally cooperate in every way in support of the consultant study groups as they formu late their proposals. While this project will benefit Panama primarily, it will also benefit the United States. It is appropriate that the United States, therefore, should participate in the planning, financing and construction of at least that portion of the proposed highway which will be within the Canal Zone itself. The extent of such participation, and the manner in which our participation will be extended, are presently undetermined. See Figure 3, page 13 for road location map. DRUGS AND NARCOTICS CONTROL The Narcotics Control Unit, organized within the Customs Division, Canal Zone Government, has the mission of curbing international drug traffic within the Canal Zone. Personnel of the unit work closely with law enforcement units of the Canal Zone, the Republic of Panama, the United States, and other international agencies. Numerous cases of pilferage, smuggling and possession of narcotics have been investigated by personnel of the Customs Division. Many of these cases are what may be termed "routine" law enforcement actions. In the non-routine category, however, was a seizure and arrest action involving possession of cocaine and marijuana valued at $10,000; the seizure of more than 800 pounds of hashish enroute from Colombia with a street value in excess of $1.5 million; and what 'was at the time it occurred the largest seizure of hashish by any law enforcement agency--a seizure on January 26, 1974, of 1,468 pounds of hashish valued at $5.0 million. This seizure was made on board a yacht in Balboa harbor. MOTOR VEHICLES For the Canal Zone Government, passenger carrying motor vehicles proposed for purchase in 1975 number 16 as compared to 15 in 1974. The 16 vehicles, of which 14 are for replacement, include 12 replacements and two additions to the Police Vehicle Fleet and the replacement of two ambulances for |