As the Panama Canal Authority moves forward with its ambitious $5.25-billion plan to upgrade the historic waterway, there are growing concerns about who will pay for the project.

On Wednesday, authority — known by its Spanish-language acronym, ACP — held a public hearing Panama concerning the proposal to restructure the Panama Canal's pricing system and certain regulations. The authority's board of directors approved the new tolls last month and it will be submitted to the Cabinet Council of the Republic of Panama for approval in the next few weeks.

But the representatives of shipping companies that attended the hearing voiced a strong displeasure at the increases, which work out to an average increase of 10 per cent per year for three years.

The Singapore Shipping Association, which represents close to 300 members of Singapore's shipowning and wider shipping community, urged the canal authority to rethink the toll increase and to spread it over a "more realistic timeframe."

"Such an increase will only exacerbate the current economic pressure which the shipping industry is currently facing and could have negative and unacceptable consequences on the world economy," said the association's president S.S. Teo in a statement released immediately after the hearing.

He said the shipping industry is alarmed at the decision to double tolls in the next 20 years, a move that, "fails to answer industry concerns about an equitable distribution of costs between current and future users, and raises questions about the direction of toll increases in the longer term."

The canal expansion will create a new lane of traffic for the waterway as well as installing new locks that can handle larger post-panamax shipping vessels. When completed in 2014, the upgrades are expected to double the cargo capacity of the canal.

The canal authority has said it plans to fund the bulk of the project through tolls, using some financing to reduce the financial burden over the life of the project. The increased capacity of the waterway allied with the toll increase is expected to bolster the canal's revinue from $1 billion to $6 billion.

Officials with the canal authority note that tolls have not increased in non-container segments — approximately 50 percent of Canal traffic — since 2002. They argued that simply accounting for inflation, tolls should have increased 10 percent over the past decade.

In a statement released Thursday, ACP Administrator/CEO Alberto Alemán Zubieta made it clear the canal authority intends to stick to the new tolls.

"We are not a utility," he said. "We are a business that provides a service to its customers, invests in its future, returns dividends to its shareholders and assumes risk when it makes major enhancements."

But shipping lines, already suffering from low rates caused by increasing capacity, say that the increased fees may further squeeze their profits to the point of damaging their business and the global economy.

The increase in international shipping and the subsequent increase in competition has kept shipping lines from increasing rates over the past two years. Transpacific Stabilization Agreement, an association of eleven shipping lines, has been working to increase rates $500 per container moving all-water via the Panama or Suez Canals to U.S. East Coast and Gulf Coast destinations.

International Chamber of Shipping joined in the criticism of the tolls saying the industry was being asked to underwrite the expansion of the waterway.

"Canal users feel that increases in Canal dues should be matched by a tangible improvement in the service provided," said ICS Secretary General, Tony Mason in a statement on the group's website. "They should not be expected to provide up-front financing for a major infrastructure project from which they may not individually derive any benefit."

Further complicating the situation is the fact that Sayed Zakaria, director of the Suez Canal transit department announced a discount on concessions on transit fees during the Trans-Pacific Maritime Conference last month. Shortly after, at the Panama Maritime VIII Conference in Panama, one of the main shipping companies using the Panama Canal, A.P. Møller-Mærsk, said it wouldn't discount the possibility of using alternative routes.

"The Panama Canal is not the only option to move cargo from one ocean to another," said Lee Johnson, Maersk administrative director for Central America in The Bulletin, a Panamanian bilingual business publication.