In April 1998 through an international bid, the Instituto de Acueductos y Alcantarillados Nacionales (IDAAN), the national water company of Panama, awarded the lake Gatun potable water supply concession to APSA., a special purpose company created by British water company Biwater Supply Limited. Under the concession contract, APSA will abstract water from Lake Gatun, treat it and deliver an agreed daily volume of potable water (varying between 15 and 20 million gallons per day MGD) into the existing distribution system at Nuevo Chorrillo. The delivery point is located on the west bank of the Panama Canal approximately 20 kilometers from Panama City. The construction of the water treatment plant was completed in June 2002 and a partial acceptance certificate was issued by IDAAN at that time. The plant was fully completed in September 2002, with a total project cost of $25 million. The contract, which provides APSA with a 30 year concession period, specifies that the company will deliver to IDAAN a minimum daily bulk volume of potable water into Nuevo Chorrillo, which serves the west bank of the Panama Canal including the urban areas of Arraijan, Chorrera and Capira. In consideration of its service, APSA will receive a monthly payment calculated on the basis of the agreed volumes of water delivered and a base unit price of $0.8942/1000 US gallons, adjustable at regular intervals by an agreed price escalation factor. The towns of Arraijan, Chorrera and Capira served by the Nuevo Chorrillo water supply system are facing an acute water shortage due to the inability of the offtaker IDAAN to produce sufficient water to supply the population in these areas, which totals 270,000 people. The APSA project will provide potable water into the distribution system increasing supply to these areas, which at present have no viable alternative. Thus the project will have a high development impact by improving the living conditions of the population in these towns. IFC financing package to APSA will enable the company to retire bridge shareholder debt from Biwater Supply Limited initially used to finance this project. IFC will provide long-term funding, otherwise unavailable to the project company, which would support private sector participation in Panama’s water and sanitation sector.