"Today we have become the masters of our own destiny," President Martin Torrijos said. "Today, we have laid the foundation for a better country." With 95 percent of votes counted, the election tribunal said 78 percent of voters had approved the project. Voter turnout was light, about 35 to 40 percent of qualified voters, officials said, blaming in part the televised soccer match between rivals Barcelona and Real Madrid.
Torrijos and the Panama Canal Authority, the government agency that has run the waterway since it was handed over to Panama by the United States in 1999, insisted that not widening the 92-year-old waterway would leave it obsolete after 2012.
About 80 percent of the gross domestic product of Panama, with a population of three million, is linked directly or indirectly to canal activity. The canal's main users are the United States, China and Japan.
Proponents say the canal, through which roughly four percent of world trade passes, badly needs an overhaul to accommodate mega-ships and remain competitive against other maritime routes.
It takes eight to 10 hours to cross the Isthmus of Panama via the 80-kilometer (50-mile) canal. But the actual average time, including the wait, is 26 hours.
The proposed third lane, parallel to the existing two, would accommodate massive vessels 366 meters (1,200 feet) in length, 49 meters (160 feet) wide and with a 15-meter (50-foot) draft.
Today, the so-called post-Panamax ships -- too wide and too long for the Panama Canal -- must circle Cape Horn at the southern tip of South America to connect to ports on the east and west coasts of the Americas.
If approved, construction is scheduled to begin in late 2007 and expected to be completed in 2014.
On Friday, the last day of the referendum campaign, former president Jorge Illueca and the former canal administrator Fernando Manfredo published a report criticising the project as costly, unnecessary and risky.
Opponents of the expansion see no urgency to such an investment and would instead tackle the poverty that affects 40 percent of the population.
But the government sees the canal as a means to wealth for all. Torrijos pointed out on Sunday that the canal is Panama's top money-maker and that the benefits trickle down to the humblest Panamanians.
"The canal is the biggest business the country," he said.
"By modernising it we increase the means for development and social investment," Torrijos said.
Panama plans 800 million dollars in investments this year, a significant part in the social sector. Of that amount, 600 million dollars was generated by the canal.
The United States is by far the biggest user of the waterway, sending 136.5 million long tons of cargo through the canal, followed by China with 35.1 million and Japan with 32.2 million, according to the Panama Canal Authority.
The government says work would be financed by a hike in tolls, worth 1.2 billion dollars in 2005.
Panamanian authorities say the project will directly generate 7,000 jobs, and indirectly 35,000.
The canal was built by the United States between 1904 and 1914 after an initial failed attempt by the French.

Copyright AFP (Agence France-Presse), 2006